GOLD PRICE NEWS – The gold price slipped slightly lower Tuesday, trading off $6.00 at $1,789 per ounce heading into the opening bell on Wall Street. The price of gold has been boosted by concerns that rising Italian bond yields will lead to the ousting of Prime Minister Berlusconi. Safe haven flows have helped drive gold prices back near $1,800 per ounce. S&P 500 stock futures moved higher, gaining 6.00 to 1263.50 ahead of a vote on Berlusconi’s budget.
The gold price opened the week with a sharp move higher, climbing $40.22, or 2.2% on Monday. The spot price of gold came within a fraction of $1,800 per ounce before backing off slightly. The gold price was supported by reports out of Europe that Germany rejected calls from the Group of 20 to sell a portion of its gold reserves to assist the euro zone bailout fund.
Silver rose in concert with the gold price, advancing 1.8% to $34.90 per ounce. Precious metals equities surged higher as well, with the Philadelphia Gold & Silver Index (XAU) jumping 3.0% to a six-week high of 215.30. Three of the sector’s top performers included Kinross Gold (KGC), Newmont Mining (NEM), and Silver Standard Resources (SSRI) – which posted gains of 3.9%, 4.0%, and 7.9%, respectively.
Ongoing sovereign debt concerns in Europe helped fuel the gold price rally, as turmoil has spread from Greece to Italy in recent weeks. With Italian bond yields spiking to multi-year highs, concerns have escalated that Italy may be the next member of the PIIGS to need financial assistance.
While Federal Reserve Chairman Ben Bernanke may continue to believe that gold is not money, senior government officials from around the world apparently disagree. Over the weekend German newspapers reported that policymakers at the G20 summit in France discussed the idea of having the German central bank sell a portion of its gold reserves to fortify the European Financial Stability Facility (EFSF). However, senior German officials quickly refuted the plan. Economy Minister Philipp Roesler was quoted as saying that Germany’s gold reserves “remain untouchable.”
Commenting on the developments, analysts at Scotia Capital wrote in a note to clients that “The week ahead looks positive for the price of gold…Political instability in Italy and Greece brought back European debt worries that sent gold up over 1% to $1,745/oz. Almost immediately after George Papandreou stepped down as prime minister of Greece, word spread of Italian Prime Minister Silvio Berlusconi being pressured to step down from his post as the contagion pushed Italy’s borrowing costs to modern day records.”
“The general sentiment among investors and the general public seems to be that the European debt woes will get worse before they get better,” Scotia Capital added, “a factor that bodes well for the price of gold for the balance of 2011 and 2012.”
Colossus Minerals Raises C$86M for Serra Pelada
Colossus plans to use the net proceeds of the offering to fund advancement of its Serra Pelada Gold-Platinum-Palladium Project in Brazil, and for general corporate purposes including working capital. Full Colossus Minerals News Release.
- Each Unit consists of a $1,000 principal amount unsecured gold-linked note and sixty common share purchase warrants.
- The Units separated into Notes and Warrants on closing.
- The Notes will mature on December 31, 2016 and will bear interest, accruing and calculated and payable semi-annually in arrears on June 30 and December 31 of each year, at a rate of between 6% and 13%, dependent on the simple average of the Bloomberg Composite New York Gold Price closing price.
- Each Warrant entitles the holder to acquire one common share of Colossus at a price of C$8.50 until expiry at 5:00 p.m. on November 8, 2016.
