Gold miners surge more than 20% in breakout week
Bullion’s two-month high sent producers sharply higher, while junior miners and the TSX Venture posted outsized gains.
Over the past week, gold mining stocks experienced a remarkable surge, with benchmark funds gaining more than 20%, as the price of gold reached its highest level since mid-June. The VanEck Gold Miners ETF (GDX) surged 21.09% over five days to $89.73, while the VanEck Junior Gold Miners ETF (GDXJ) climbed 22.42% to $116.78. Major producers such as Agnico Eagle Mines (TSX: AEM; NYSE: AEM) and Newmont (NYSE: NEM) also saw significant gains, with the former rising 22.92% to C$250.17 and the latter advancing 20.55% to $112.97.
This impressive performance highlights the miners' sensitivity to gold prices. As gold prices rise, revenue for mining companies can increase rapidly, while many operating costs adjust more slowly. This disparity between gold prices and operating costs can lead to a disproportionate impact on earnings expectations and share valuations.
Gold's breakout followed a surprise in US employment data, which showed a sharp decrease in jobs in July, leading to an unexpected contraction in the US economy. This unexpected turn in the economy shifted expectations for Federal Reserve policy, contributing to the rise in gold prices. The impact of this news was felt immediately in the mining sector, with junior miners outperforming their larger peers, a phenomenon often seen during sharp increases in gold prices.
While other mining equities did not match the pace of the precious-metal sector, copper miners also saw gains, with the Global X Copper Miners ETF (COPX) rising 12%. This broader rally underscores the scale of gold miners' surge, as gold's break to a two-month high fueled a rapid re-pricing of the sector.
Written by urgent.news from Mining.com's reporting — not their text. Machine-written; read the original for the full account.
