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A Gold Miner With Some Shine Left

While gold equities are no longer cheap as a group, we still see upside in Goldcorp.

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Gold started out 2016 with a bang. After a lackluster 2015 that saw prices plummet to roughly $1,050 per ounce, levels not seen since 2010, gold skyrocketed nearly $200 per ounce in a little over a month. Gold currently trades at about $1,220 per ounce. However, resurgent investor demand for gold rests on tenuous circumstances. Historically, safe-haven rallies have proved short-lived, and we see near-term downside if fears of a severe recession end up being unwarranted.

Because of stronger investor demand than we expected, we raised our forecast for 2016 gold prices to $1,100 per ounce from $950. But despite the near-term strength, we continue to believe investment demand will wane over the next few years, and we maintain our 2017 forecast of $1,050 per ounce and 2018 forecast of $1,150 per ounce. Our view is predicated on continued interest rate hikes, moderate inflation, and global market stabilization that reduce gold's appeal as a safe haven.

Kristoffer Inton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.