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Source: ADP Employment Change by FXStreet

“Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” said Ahu Yildirmaz, co-head of the ADP Research Institute.

Non-farm payrolls this Friday is also expected to show 20 million workers losing their jobs and the unemployment rate forecasted to jump from 4.4% to 14%.

Spot gold fell 0.9% to $1690 per ounce as the US Dollar Index, a measure of the US currency’s value relative to a basket of top 6 currencies, rose for a fourth straight session to break the key barrier at 100.00.

There is "optimism about the outlook for economies as we start to move away from lockdown," said Michael McCarthy, chief strategist at the spread betting firm, CMC Markets.

"On the other side, we are seeing support for safe-haven yen and the US dollar is also holding up quite well. So, there clearly are different views about the outlook for the global economy."

On Tuesday, US President Donald Trump urged again China to be transparent about the origins of the novel coronavirus that has killed more than a quarter of a million people worldwide since it started in the Chinese city of Wuhan late last year.

Mr Trump also confirmed the White House coronavirus task force will be winding down, saying Americans should begin returning to their everyday lives even if it leads to more sickness and death from the pandemic.

Fed Vice Chairman Richard Clarida warned the economy will need more government support, but economy to rebound next quarter on the interview Tuesday.

In contrast, the European Commission on Wednesday estimated that GDP in the EU will contract 7.7% in 2020.

“The European Union is facing the deepest economic downturn in its history, which threatens the very future of the euro currency if the crisis is badly handled,” the bloc’s executive arm warned.

Gold prices for European clients dipped by 0.6% to €1563 per ounce as the Euro headed towards two-week lows against the dollar on weak PMI figures, which indicated a further drop in the Eurozone private sector economy as the Coronavirus continues to wreak havoc.

The gold price in the British Pound edged down by 0.3% at £1365 per ounce as the UK also saw a sharp fall in yesterday’s PMI data for the services sector and with the UK death toll passing Italy to be highest in Europe.

Gold prices on the Shanghai Gold Exchange, opened after the five-day national Labour Day holiday, continued to show a historic discount to London, but reducing to $37 per ounce on Wednesday after wholesale bullion in the metal’s No.1 consumer market eased the weekly average to $44 last week.

India, the world’s second biggest consumer of the precious metal, imported around 50 kilograms of gold in April, down from 110.18 tonnes a year ago, a government source said on Monday.

This is a 99.9% plunge year-on-year and the lowest in nearly t

Peel Hunt cont-
2. P/NAV change since our gold report in early March.
We have chosen to use the longer-term-oriented P/NAV metric in order to
account for our much more conservative long-term gold price forecast of
US$1,300/oz. This not only gives better insight as to which companies will
remain profitable at much lower gold prices, but it also takes out some of the
hype and volatility of the near-term movements in the gold price.
The laggards – PAF, HOC, SRB
We have ranked Table 1 below from low to high on P/NAV percentage change
since the March lows to show exactly how these equities have behaved over the
past five weeks while investors were overwhelmed with company
announcements. It is clear that a group of three companies (Pan African,
Hochschild and Serabi) have lagged to the two leaders of our coverage
(Centamin and Pure Gold)
We note that both Hochschild and Pan African suffered enforced shutdowns;
these are now abating. While Serabi’s site remains open, travel bans in the State
of Para mean it cannot rotate its workforce, slowing productivity levels.
Pan African’s P/NAV not only remains unchanged since the beginning of
March, but it also ranks as the lowest of all the gold producers we cover at just
0.52x P/NAV. It has been able to continue operating its surface facilities through
most of the South African (RSA) lockdown with limited operational capability at
its underground mine at Fairview. PAF is now moving towards operational
readiness and starting to re-open its broader underground operations with a target
capacity utilisation of 50% until further advised by the government.
Hochschild Mining retains a premium P/NAV rating to the other two laggards,
but has decreased the most since early March, with a P/NAV change of -28%.
HOC saw the largest contraction in its P/NAV in March of nearly 50% as the
silver price fell 34%. In Argentina HOC has already begun the re-start of its San
Jose JV, but remobilisation is expected to take time. Inmaculada and Pallancata
are running at the limited capacity utilisation levels permitted for underground
mines, but the full re-start of both mines is subject to government lockdown
measures that have been extended out to 10 May.
Serabi, meanwhile, is one of only two P/NAV losers over the past two months
and has maintained its P/NAV rank at second to bottom throughout the period.
Over this period it has also renegotiated its deferred consideration payment of
US$12m and the associated Greenstone US$12m convertible loan to fund the
payment. Moreover, it has successfully commissioned its ore sorter. Its mine site
remains open, with management having extended the roster shift length of those
workers on site when Para state enforced its travel ban.
The Leaders – CEY and PUR
Centamin has been one of the best performers over the recent five-week period,
with nearly a 70% gain in its share price and P/NAV over that period. The recent
rebound in the shares has resulted in a P

Peel Hunt 30th April 2020
Gold leaders & laggards
The gold price has seen a rollercoaster ride as Covid-19 laid
Western economies low. After initially rising, it fell back in the
March sell-off before recovering 17% to a seven-year high. We
have seen a wide disparity in gold equity performance over this
period, with Centamin standing out. This leaves Pan African#,
Hochschild Mining and Serabi# as relative laggards – all of
which were more directly affected by Covid-19 restrictions. As
these restrictions abate, then these names should see the most
appealing risk-reward balances in our coverage group.
Centamin and Pure Gold# have led the gold equities since the March lows
Pure Gold is the gold equity under our coverage with the strongest bounce in its
P/NAV valuation since the March lows, coming in at just over 80%. Centamin
ranks second with a near 70% bounce in its valuation and is now trading at a 5%
premium to its NAV, the only stock in our coverage to do so. The leaders were
our key equity picks at the market lows in March.
Pan African, Hochschild & Serabi have been the gold equity laggards
However, we think the laggards in the gold group will become more important to
focus on in the medium term. Pan African and Serabi have continued to rank the
lowest on a P/NAV basis throughout the recent crisis, and have only risen ~40%
since the March lows. Hochschild Mining has to date bounced a similar amount
as the other laggards, but it is worth noting the company has experienced the
single largest decrease in P/NAV since early March (-28%).
Real rate stability likely to consolidate gold prices through Q2 2020
We are not expecting large changes in either interest rates or inflation
expectations in the near term, meaning we expect real interest rates to stay
around present levels (-50bp), sustaining the gold price around current levels.
The weak domestic currencies drive even stronger margins for our coverage.
Our medium-term gold price forecasts look to offer upside
We have assumed that as the world normalises in H2 2020 and into 2021 that
gold prices will fall away. We suspect this is highly conservative. Following the
Covid-19 shock we think central banks will be reticent to raise rates quickly, and
as such any increase in inflation expectations as the world recovers may well
support a further leg up in gold prices later in 2020
Gold equity leaders and laggards
We continue to believe that investors should hold gold and gold-related equities
throughout most of 2020 on the back of the highly uncertain global economic
outlook and related market volatility. We anticipate a period of sustained strong
gold pricing through Q2 2020 and Q3 2020.
However, despite our unchanged positive outlook for gold, gold equities have had
a significantly varied performances over the past month or two. We have taken a
look at the P/NAV performance of our gold equity coverage over two periods:
1. P/NAV change since the March lows;

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