GOLD PRICE NEWS – The gold price surged Friday ahead of the release of the monthly jobs report and rallied further on the weaker than expected data. The price of gold climbed $44.12 to $1,870.30 per ounce after the Labor Department reported that zero nonfarm payrolls were created in August versus expectations of 68,000, according to a Bloomberg survey of economists. This was the weakest jobs data since September 2010. Furthermore, July’s payroll figures were revised downward. The unemployment rate was unchanged at 9.1% in August.
The tepid labor market has led to a flurry of chatter from economists and investment strategists that a fresh round of fiscal and monetary stimulus is in the offing. President Obama is set to give a speech next week where he will outline a plan to restart the waning economic recovery. Later this month, Chairman Bernanke and the Federal Open Market Committee (FOMC) will convene a two-day meeting. A fresh round of quantitative easing appears to be on the table despite the Fed Chairman’s dwindling consensus on the FOMC. Gold prices have soared 9.7% off the $1,704 per ounce level hit just two weeks ago.
Following its best month since the gold bull market began in 2001, the spot gold price began September by holding firm near $1,825 per ounce. Stability in the gold price came as investors awaited Friday’s key non-farm payrolls report. Mixed economic data in the U.S., coupled with strength in the U.S. dollar, helped to keep the price of gold oscillating near unchanged for most of the day.
Silver held steady alongside the gold price, inching higher by 0.2% to $41.60 per ounce. Gold and silver equities outperformed precious metals yesterday with the Philadelphia Gold & Silver Index (XAU) climbing 0.6% to 219.29. Among gold mining companies, Yamana Gold (AUY) and Harmony Gold (HMY) added 1.8% and 1.5%, respectively. Silver Wheaton (SLW), the world’s largest silver streaming company, advanced 0.3%. Gold mining stocks rallied Friday morning on higher gold prices.
While the non-farm payrolls report is generally considered the most crucial piece of U.S. economic data, two other key reports were released on Thursday. Weekly jobless claims came in at 408,000, roughly in-line with the consensus estimate among economists. On the positive side, the ISM Manufacturing Index for August fell less than expected. At 50.6, the ISM figure was well north of the 47.0 level economists was expecting.
Gold prices have risen on the back of the prospects for further economic weakness in the second half of 2011 and into 2012. Furthermore, the Federal Reserve’s recent pledge to hold the Fed funds rate near zero until mid-2013 has fostered an even more favorable environment for the price of gold. Until a more consistent set of encouraging economic data emerges, the gold price is likely to remain well supported.
Robin Bhar, senior metals analyst with Credit Agricole, echoed these sentiments in a note to clients this week. “When real interest rates are negative like in the (United) States for the foreseeable future, that’s going to be a huge boost to gold,” Bhar wrote. “The opportunity cost, among other factors, is negligible…Nothing has really changed in terms of the appetite (among investors) for diversifying into and holding gold as a form of insurance.”
Bhar went on to say that “Economic and financial developments should be the main drivers of the gold price for the rest of 2011.” Specifically, the Credit Agricole analyst pointed to rising debt burdens in the U.S. and euro zone, ongoing currency debasement, and deflationary risks, among other items.
Colossus Minerals Appoints Two New Directors to Board
- Mr. Silva is currently the President and CEO of MBAC Fertilizer Corp., a producer of phosphate and potassium fertilizers in Brazil. He has approximately 40 years of experience in the mining and chemical industries, and has provided technical consultation and training in development, construction, start-up, operation, strategic planning and productivity for various mining, hydropower and industrial companies.
- Mr. Silva has served as a Director of Yamana Gold Inc. since July 2003. He previously served as Chief Operating Officer from July 2003 to May 2007 and as President from May 2007 until his retirement from such position in September 2009.
- Mr. Leiderman is the managing partner of the Toronto accounting firm Lipton LLP, Chartered Accountants. He has over 30 years experience specializing in assurance and advisory services, financing, tax, estate and strategic planning for corporations and partnerships.
- Mr. Liederman has served as an independent director of Agnico-Eagle Mines Limited since January 2003, has been a member of the Audit Committee since January 2003, and served as Chair of the Audit Committee from May 2005 to April 2011.
