Gold rises 25% in 2024 but lags this week as US-China talks ease haven demand pressures
Gold prices have surged more than 25 percent in 2024, hitting a record above US$3,500 last week, but gold mining equities continue to trail, as reported by BNN Bloomberg.
Despite bullion’s momentum, mining stocks have underperformed, weighed down by rising costs, production misses, and investor preference for higher returns in other sectors.
Rob McEwen, founder of Goldcorp and current chair of McEwen Mining Inc., said that trend may soon reverse.
McEwen expects investor attention to return to the gold sector, leading to “explosive” gains for producers.
He told BNN Bloomberg, “You have this cascading effect of gold’s going up, and then there’s interest in the majors, and then it goes down to the mid-tier, and then the juniors and the explorers. When it gets down to that stage, it becomes very explosive in terms of the upward push.”
McEwen added that gold is still in the early stages of a bull market and projected bullion could reach US$5,000 an ounce within two to three years.
He expects gold equities to eventually outperform the metal itself. While that forecast exceeds most mainstream analyst estimates, some have raised their targets as prices have climbed.
As of May 2, spot gold rose 0.8 percent to US$3,263.45 an ounce as of 10:42 am in London, benefiting from a 0.6 percent drop in the Bloomberg Dollar Spot Index.
A weaker dollar tends to support gold by making it more affordable for buyers using other currencies.
Still, gold is heading for its first back-to-back weekly loss of 2024, falling 1.7 percent this week. The decline comes as haven demand softened amid signs of a thaw in the US-China trade dispute.
China said it is assessing the possibility of resuming trade talks—the first such indication since US President Donald Trump raised tariffs last month.
Stronger-than-expected US manufacturing data and robust tech earnings have further supported risk appetite.
Traders have reduced bets on the pace of US interest-rate cuts, with markets now fully pricing in a first quarter-point reduction in July.
Higher rates and yields typically weigh on non-interest-bearing assets such as gold.
The recent ascent in gold prices has been underpinned by central bank buying, speculative demand in China, and growing investor concern over the global economic impact of White House policies.
Despite a sharp selloff this week, McEwen maintained that the sector is poised for recovery.
His company, McEwen Mining, which operates several small mines and development projects, has seen its shares decline 34 percent over the past year.
He acknowledged that investor reluctance toward the sector has been a headwind, but remains confident in its long-term prospects.
