GOLD PRICE NEWS – The gold price climbed back above $1,550 Tuesday morning, trading lower by $1.50 versus yesterday’s close at $1,552 per ounce. The price of gold held relatively steady amid a steep sell-off in global stock markets. The euro faced heavy selling early this morning, falling as low as 1.384 against the U.S. dollar before climbing back to 1.40. Fears of sovereign debt contagion, notably with respect to Italy, continue to weigh on Europe’s common currency and on risk appetites in general.
Unlike the gold price, silver has faced heavy selling pressure in recent days. Gold’s sister precious metal traded lower by 4.8% versus yesterday’s high print to $35.16 per ounce as selling intensified across the commodities complex. TD Securities Global Precious Metals Team noted that “Silver really struggled yesterday as the market got long on the back of gold. These punters got punished as silver dropped over $1.30 to find the stops even as gold held its gains. Silver volumes remain very small and we re-iterate that it is not currently in play. If you’re bullish gold, buy gold… leave silver well alone.”
The gold price began the week on a positive note yesterday, rising $11.44 to $1,555.65 per ounce. The price of gold climbed to $1,557.60 in morning trading before falling sharply to $1,542. Gold rebounded back toward its intra-day high as the day progressed and investors shifted funds into counter-cyclical assets such as gold and U.S. Treasury bonds. The safe haven quality of the yellow metal helped buoy the gold price as investors and traders liquidated equities and cyclical commodities in response to mounting euro zone sovereign debt fears. Crude oil prices moved lower again this morning – down $0.44 to $94.71 per barrel – after sliding 1.3% yesterday.
Gold shares were set to open near unchanged despite slightly lower gold prices. The AMEX Gold Bugs Index (HUI), comprised of many of the world’s largest gold companies, finished lower by 1.3% at 529.53 on Monday. Barrick Gold (ABX) and Goldcorp (GG), the two largest by market capitalization, settled with losses of 1.0% and 0.5%, respectively. Newmont Mining (NEM), the only gold company included in the S&P 500 Index, posted a 0.9% decline.
The gold price received yet another boost on Monday from the ongoing drama that is the European sovereign debt crisis. While Greece has been the center of attention, the spotlight has recently shifted to Italy. Following substantial losses in Italian bonds and stocks in recent days, the European Union (EU) called an emergency meeting to discuss the policy response toward the next member of the PIIGs to come under fire. Italy’s economy is the third largest in the euro zone – behind German and France – and has the second largest debt-to-GDP ratio, after Greece.
The spread between 10-year yields on Italian government bonds and comparable German bunds climbed to a new all-time high of 305 basis points on Monday. This level marked a 150% increase over its year-to-date low of 122 basis points, seen only three months ago on April 12. The euro currency has faced heavy selling, falling to three-month lows against the U.S. dollar early Tuesday.
At the meeting, European policymakers also discussed providing Greece with additional rounds of financial assistance. The Financial Times reported that some officials were, for the first time, preparing to accept that Greece may need to default on a portion of its bonds as part of a new bailout plan. According to the report, policymakers cautioned the new program was still in the early stages and final details were not anticipated until late summer. However, if the strategy were to be implemented, it would mark a crucial shift in policy response toward efforts to contain the Euro zone debt crisis.
If a proposal involving a Greek default was implemented, the euro currency would likely come under additional significant pressure against other fiat currencies, as well as against the gold price. While the euro-denominated price of gold reached a new record high of €1,118.50 on Tuesday, fresh all-time highs could be seen in short order, particularly if the situation also continues to worsen in Italy.
Extorre Gold Mines Closes Equity Financing
- The net proceeds from the Offering will be used for exploration and development of Extorre's gold and silver discoveries in Argentina and for general working capital purposes.
- The proceeds from the Offering will enable the Company to maintain the six drill rig program at its Cerro Moro project through the balance of 2011 and to perform a PEA update.
- A new PEA with a further 50% production expansion is being proposed before year-end. That scenario will include the Zoe discovery and a number of additional veins that are not included in the current PEA