Top Stories This Week: Gold Ends August Strong, Pops on Jobs Data

The beginning of August was rocky for gold, but the yellow metal finished off the month fairly strong, staying steady above the US$1,800 per ounce level.  

September has so far been even better for gold, which rose to around the US$1,830 level on Friday (September 3) after the latest American jobs numbers came in lower than anticipated.

The US Department of Labor reported that only 235,000 jobs were added in August, far below the 720,000 expected by economists and the worst total since January. The unemployment rate dropped to 5.2 percent from 5.4 percent, which was in line with estimates.

“The labor market recovery hit the brakes this month with a dramatic showdown in all industries,” Daniel Zhao, senior economist at jobs site Glassdoor, told CNBC. “Ultimately, the Delta variant wave is a harsh reminder that the pandemic is still in the driver’s seat, and it controls our economic future.”

Gold’s upward momentum in September comes after it dropped below US$1,800 last week following the US Federal Reserve’s meeting in Jackson Hole, Wyoming. At the annual event, Chair Jerome Powell said he supports tapering bond purchases this year, but didn’t indicate a timeline.

Speaking about the central bank’s latest meeting, Chris Marchese of GoldSeek and SilverSeek described the tone as “very dovish,” which is good news for precious metals. He also pointed out that the Fed is still a long way from hiking interest rates, and said it will still be buying assets even when tapering starts.

Chris has a positive outlook on gold overall, and reminded investors who may be discouraged by this year’s performance that the biggest pullbacks come during bull markets.

“The financial system has not been fixed since 2008, 2009. It’s still a mess, and we’re just trying to paper it over by printing more and more money. That has never been successful in the history of the world, so I don’t see why it would be now” — Chris Marchese, GoldSeek & SilverSeek

Also this week, INN’s Priscila Barrera looked at ESG, a topic that’s becoming increasingly important across the mining sector. ESG is an acronym used to represent environmental, social and governance issues, meaning that it brings non-financial variables into investing.

ESG is a wide-ranging concept, and since it’s still relatively early days it can be difficult for investors to understand whether a company is doing a good job hitting ESG targets. To solve that problem, many firms have devised rating systems to evaluate companies’ efforts — but even then it can be tough to directly compare businesses focused on different industries.

“It’s really challenging to ‘grade’ a certain company, just because there’s no universal metric that applies to every company” — Federico Gay, Refinitiv

So what should resource investors know about ESG? For now, one key takeaway is that mining companies have a high capacity to be impacted by ESG concerns.

“(Mining companies) have a number of issues that they have to deal with, which have a high capacity to affect returns and business growth. In terms of management, disclosures are still weak in some companies, they are still catching up, especially in emerging markets” — Dana Sasarean, Sustainalytics

But there are options out there — Wheaton Precious Metals (TSX:WPM,NYSE:WPM), Franco-Nevada (TSX:FNV,NYSE:FNV) and Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK) are three mining companies that research firm Sustainalytics has given high ESG ratings.

With ESG in mind, we asked our Twitter followers this week whether it’s an idea they consider when they make investments in the mining space. By the time the poll closed respondents were split fairly evenly — about 55 percent said yes and 45 percent said no.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.