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Rising gold to offset Q2 pandemic hits on precious metals miners, say analysts


CALGARY — Rising prices for gold are expected to buoy results as Canada's precious metals miners begin rolling out second-quarter financial results next week.

RBC Capital Markets says in a report negative impacts of the COVID-19 pandemic on production and costs are being offset by an average gold price that rose eight per cent to hit US$1,713 per ounce in the second quarter.

The bank's analysts say they expect mine suspensions and lower productivity due to measures to control the pandemic will result in 11 per cent lower gold and silver production and a four per cent rise in overall costs.

Earlier this week, Barrick Gold Corp. reported preliminary second quarter gold production fell eight per cent mainly due to COVID-19 related disruptions at its Veladero mine in Argentina.

Meanwhile, Moody's Investor Service says temporary mine closures, production losses, care and maintenance expenses and costs for new health and safety protocols will weigh heavily on second-quarter results for miners.

But low energy prices could cut three to five per cent from gold mine operating costs, it says, pointing out energy makes up 15 to 20 per cent of operating costs at a typical gold mine.

Both gold and silver beat price expectations for the second quarter and both are poised to continue to rise, said analysts with Haywood Securities in a second quarter preview report.

"We maintain our view that gold is now in the early days of a new bull market and would not be surprised to see gold push through the old 2011 high of US$1,923 per ounce this year," it said.

This report by The Canadian Press was first published July 17, 2020.

Companies in this story: (TSX:ABX)

The Canadian Press

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