Gold Hits Record High: Ride the Rally With These 2 Stocks & 1 ETF

Political turmoil and expectations of Federal Reserve rate cuts have boosted the price of gold to record highs, benefiting gold mining stocks such as Newmont Corporation NEM and Kinross Gold Corporation KGC, and the SPDR Gold Shares ETF GLD. Therefore, astute investors should hold onto these assets for potential long-term gains. Let’s take a closer look –  

All-Time High for Gold – Here’s What’s Behind the Surge 

This year, gold's bullish run shows no signs of slowing down, with the yellow metal soaring over 50% and easily outperforming the broader S&P 500's gains. Gold prices exceeded the coveted $4,000 per ounce mark on Oct. 9 and reached an all-time high of $4,179.48 per ounce on Oct. 14. 

The surge in gold prices indicates that both institutional and retail investors are cautious about economic growth in the near future. They anticipate periods of economic stress due to increased tensions between the United States and China. Expectations surrounding future trade issues, export restrictions, and rising tariffs between Washington and Beijing could increase demand for safe-haven assets like gold.  

Beijing has already announced export controls on some rare earth minerals, and in response, President Trump threatened to impose 100% tariffs on U.S.-bound goods from China. But it's not just U.S.-China trade issues that are worrisome; uncertainty related to the 13-day government shutdown also plays a major role in driving gold prices higher. Investors often buy gold to protect their portfolios against fiscal uncertainty and political stalemates. 

Additionally, growing expectations of a Fed rate cut are boosting the yellow metal's price. Market experts anticipate the Fed will cut rates by 25 basis points in both October and November amid the prevailing job market risks. These expectations weakened the U.S. dollar and boosted gold as investors sought stability over volatility. 

2 Major Reasons Why Gold's Record Run Isn't Over Yet  

Gold prices have not only surpassed unreachable levels but are also expected to rise further. This is because central banks around the world are increasing their gold holdings to reduce risks and diversify their reserves. Over the next 12 months, several central banks plan to buy more gold and reduce their reliance on the U.S. dollar. 

The U.S. dollar, meanwhile, is experiencing a steady decline, which benefits gold prices. The dollar saw its worst fall in 50 years during the first half of the year, making it more cost-effective to purchase dollar-denominated assets like gold.  

2 Stocks and an ETF Poised to Soar 

While gold prices are scaling upward, prominent banks like Goldman Sachs GS expect the price of the yellow metal to increase further to $4,900 per ounce by 2026. This rise in the price of the yellow metal should certainly boost the profit margins of gold mining stocks such as Newmont and Kinross Gold.  

Newmont is one of the major producers and explorers of gold properties worldwide. It has operations in both Colorado and Nevada in the United States. Newmont is making progress in its growth projects, and its Newcrest acquisition is expected to generate strong synergies. The company’s expected earnings growth rate for the current year is 58.1%. The $5.57 Zacks Consensus Estimate for NEM’s earnings per share (EPS) is up 44.7% from a year ago. 

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Kinross Gold is another explorer of gold mines and has significant assets in the United States. Kinross Gold is also advancing its projects, and its expected earnings growth rate for the current year is 111.8%. The $1.44 Zacks Consensus Estimate for KGC’s EPS is up 65.5% from a year ago.  

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Along with the stocks, an SPDR Gold Shares ETF is also positioned to gain. This is because the primary objective of the fund is to mimic the price of gold. ETFs, anyhow, offer storage and liquidity advantages over holding physical gold. Nevertheless, GLD has gained more than 50% over the past year. 

For now, both Newmont and Kinross Gold have a Zacks Rank #2 (Buy), while GLD has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here. 

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This article originally published on Zacks Investment Research (zacks.com).

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