Gold traded to the upside early Tuesday, climbing $2.00 to $1,546.75 per ounce as the U.S. dollar sank to a one-month low versus the euro. Gold continues to hold up well amid broad-based selling pressure in global financial markets. The S&P 500 sank 1.1% yesterday and has now dropped four consecutive days. S&P 500 stock futures are rebounding this morning, gaining 5.60 to 1290.60 heading into the opening bell on Wall Street. The share prices of gold mining producers traded to the upside in pre-market activity, although they continue to lag the price of gold. The big question is when, if ever, will this change? According to the metals and mining team at TD Newcrest, gold stocks are cheap. The firm reiterated their bullish outlook on the shares of gold stocks. In a report to clients, TD noted: “Gold equities look inexpensive relative to gold and historical multiples. Despite gold rising 8.5% YTD and continued margin expansion, gold equities have struggled with the S&P/TSX Gold index (in US$ terms) falling 7.7%.” “Weakness has been broad based, with 23 of 33 precious metals companies in our coverage universe, having negative returns year-to-date. We believe the current economic environment remains bullish for gold and we don’t believe this is reflected in current multiples. Our top picks are Goldcorp and Eldorado among producers and Canaco, Continental and Rubicon among the developers.”

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