10:24 AM EST, 11/25/2024 (MT Newswires) -- RBC Capital Markets on Monday outlined key takeaways from recent meetings with investors across Europe following its large-cap precious metals conference in London on November 12.

RBC said that despite recent gold and gold equity market volatility, it highlighted a "notable" pick up in interest in the sector versus prior years.

According to RBC, recent gold weakness is seen as temporary, saying that investors noted that gold was among the only Trump trades that did not react positively to election results.

RBC said that strength in the dollar, yields, and equities are viewed as a short-term headwind, while a positive outlook for gold was likely to be supported by the continued theme of de-dollarization and central bank buying, plus ongoing inflation risks. Various investors questioned whether crypto and its potential growth via US regulation could negatively affect demand for gold, RBC added.

Meanwhile, RBC said investors were disappointed by the third-quarter results of gold producers, with the reemergence of cost inflation a new theme of concern.

"Given historical challenges with the sector providing leverage to gold, generalists questioned whether gold equities could provide leverage to the underlying commodity and evaluated gold vs. gold equities as investments more carefully," RBC said. "Specialist investors view rising costs as a headwind, but only as a partial offset to the sector's improving fundamentals. Cost concerns are viewed as being more case specific, rather than a broader sector theme, the bank added.

In light of the emergence of cost concerns in the third quarter, RBC said questions over positioning in royalties compared to producers have increased in frequency.

Over the course of 2024, RBC said, investors have been biased to maintain a higher exposure to operators over royalty companies, but cost concerns into guidance season is placing this under review. "In general, investors viewed the outlook for producers being better on a 1Y basis, given a constructive gold price outlook and higher operating leverage, plus concerns over the outlook for royalty companies to announce new deals at the same pace as historical activity," RBC added.

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