GOLD PRICE NEWS – The gold price dipped $8.07 to $1,608.82 per ounce Thursday after U.S. weekly jobless claims fell to 364,000, their lowest level since April 2008. The modest decline in the gold price coincided with a firmer U.S. dollar, which rose fractionally against a basket of foreign currencies. Silver inched lower alongside the price of gold, by $0.05, to $29.39 per ounce. European equity markets were higher across the board on Thursday, while U.S. markets looked to open moderately higher – with S&P 500 futures up 5 points, or 0.4%, at 1,241.25.
On Wednesday the gold price settled near unchanged at $1,615 per ounce despite the European Central Bank’s (ECB) implementing additional liquidity measures to assist its banking system. Specifically, the ECB offered to loan up to $645 million to 523 euro-area banks over a three-year time frame as part of the central bank’s longer-term refinancing operation, or LTRO.
The spot price of gold quickly jumped to $1,642.70 following the ECB’s announcement, while the euro rose 0.9% to 1.3199 against the U.S. dollar. However, the price of gold subsequently fell back toward the $1,615 level as the euro tumbled to 1.3045 versus the greenback. Although financial markets initially cheered the LTRO news, speculation later arose that a more dire set of circumstances may have prompted the ECB to unexpectedly implement the measures. As a result, investors pared positions in the euro and moved into the U.S. dollar, which helped pressure the price of gold.
Jonathan Loynes, Chief European Economist at Capital Markets, wrote in a note to clients that “While this might help to address recent signs of renewed tensions in credit markets and support bank lending, we remain skeptical of the idea that the operation will ease the sovereign debt crisis too.”
Gold shares stabilized near the flatline alongside the gold price on Wednesday, with the AMEX Gold Bugs Index (HUI) closing lower by just 0.1% at 513.56. Notable decliners in the sector included Gold Fields (GFI) and Kinross Gold (KGC), which slid 1.0% and 0.5%, respectively. In contrast, Barrick Gold (ABX) advanced 0.4% to $46.28 per share and Newmont Mining (NEM) rose 0.4% to $62.88 per share.
With the gold price relinquishing most of its gains yesterday, the yellow metal is now lower by 7.4% this month. Looking ahead to the remainder of the year, Scotia Mocatta analyst Simon Weeks forecasted that “Despite on-going physical demand from China (ahead of January 23 New Year) and year end-related buying from India which is providing support to the gold price,” he remains cautious on the yellow metal.
Weeks attributed his stance to gold’s current bearish condition from a technical perspective, along with redemptions from ETFs and “headline risk in thin market conditions.” He predicted that the $1,600 per ounce level “will likely act as a magnet” as 2011 draws to a close.
Premier Gold Expands High-Grade Zones at Trans-Canada Project
- Four zones are currently being drilled including the HGN, F2, North Shear and Key Lake (West Extension)
- The HGN and F2 zones are located proximal to the historic mine workings and remain open both up and down plunge
- The North Shear is a new discovery located between the Hardrock and Little Long Lac Mines and the West Extension target is a high grade target along strike from the Key Lake deposit that was acquired through Premier's acquisition of Goldstone Resources earlier in 2011
- These zones have characteristics similar to the high-grade past producing Little Long Lac (600,000 ounces gold produced at a grade of 11.7 grams per tonne) and Leitch (847,900 ounces produced at a grade of 31.5 grams per tonne) Gold Mines that are located on the Trans-Canada Project
