Gold prices reach all-time highs: Which European-listed stocks may benefit?

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Gold prices touched $2,150 per ounce (€1,971 per ounce) during the trading session on Wednesday, 6 March, surpassing the previous all-time high of $2,146/oz (€1,968/oz) reached in December 2023.

The precious metal has racked up a streak of seven consecutive green sessions, an event that had not occurred since August 2023.

The push towards new record highs comes from the market’s growing expectations of the beginning of Federal Reserve rate cuts over the course of 2024.

The latest data on the Personal Consumption Expenditures (PCE) price index – the preferred measure of inflation by Jerome Powell and the FOMC board – came out in line with expectations, dropping to 2.4% in January 2024.

In his opening remarks for his semiannual testimony before the US Congress, Fed Chair Jerome Powell underscored the likelihood of beginning to dial back policy restraint at some point this year, contingent upon continued economic stability and a sustainable move towards the 2% inflation target.

The market is currently pricing in about four rate cuts in 2024, with a 73% probability of a first cut by June 2024.

The yield on 10-year US Treasury bonds has fallen to 4.1%, from the 5% yield they had in October 2023.

European-listed stocks affected by gold prices

1. Hochschild Mining plc

• Description: A leading precious metals company focused on high-grade silver and gold deposits in the Americas.
• Why it may benefit: Hochschild Mining could benefit from higher gold prices as it would increase the value of their output and improve revenue, assuming that gold production costs remain controlled.
• Country of Incorporation: United Kingdom
• Listed Market: London Stock Exchange (LSE)
• Ticker: HOC

2. Metals Exploration plc

• Description: Metals Exploration is engaged in the exploration and development of gold and other mineral properties in The Philippines.
• Why it may benefit: As a company that explores and develops precious metal deposits, Metals Exploration stands to gain from increased gold valuation, enhancing the economic viability of their projects.
• Country of Incorporation: United Kingdom
• Listed Market: London Stock Exchange AIM (Alternative Investment Market)
• Ticker: MTL

3. Kodal Minerals PLC

• Description: Primarily involved in the exploration for lithium and gold in West Africa.
• Why it may benefit: Kodal Minerals could benefit from elevated gold prices which might increase the company’s asset value and attract investment for further exploration.
• Country of Incorporation: United Kingdom
• Listed Market: London Stock Exchange AIM
• Ticker: KOD

4. Endeavour Mining plc

• Description: Endeavour Mining is a leading global gold producer, with a focus on West Africa.
• Why it may benefit: As a gold producer, Endeavour Mining’s profitability is closely tied to gold prices, with higher prices potentially leading to improved profit margins.
• Country of Incorporation: Channel Islands, Jersey
• Listed Market: London Stock Exchange
• Ticker: EDV

5. Compagnie Financière Richemont SA

• Description: Richemont owns several of the world’s leading luxury goods companies, with particular strengths in jewellery, luxury watches, and premium accessories. Brands under its umbrella include Cartier, Van Cleef & Arpels, and Piaget, known for their high-end jewellery and watches.
• Why it may benefit: Richemont, with high-end jewellery brands, may see increased value in inventory with higher gold prices and potential for luxury price adjustments. However, the cost of production for new pieces could also increase.
• Country of Incorporation: Switzerland
• Listed Market: SIX Swiss Exchange
• Ticker: CFR

6. Pandora A/S

• Description: Pandora is renowned for its customisable charm bracelets, designer rings, necklaces, and watches.
• Why it may benefit: While Pandora uses various materials, gold features prominently in many of its collections. It may benefit indirectly from the higher perceived value of its gold jewellery, possibly supporting premium pricing, even though increased raw material costs could impact margins.
• Country of Incorporation: Denmark
• Listed Market: Copenhagen Stock Exchange
• Ticker: PNDORA

7. The Swatch Group AG

• Why it may benefit: Swatch could leverage the prestige associated with gold in its luxury watches to potentially command higher prices, offsetting the increased cost of materials.
• Country of Incorporation: Switzerland
• Listed Market: SIX Swiss Exchange
• Ticker: UHR

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