GOLD PRICE NEWS – The gold price traded slightly lower Wednesday, off $3.70 at $1,648 per ounce. Gold prices declined in spite of weakness in the U.S. dollar, which fell against most of its foreign counterparts. The U.S. Dollar Index (DXY) slid 0.28 to 80.83. The euro rallied against the dollar following news that the International Monetary Fund was set to propose raising its lending capacity by $500 billion. Bond yields on Portuguese, Spanish, and Italian debt all moved lower as sovereign debt concerns eased on rumors of the potential boost in IMF firepower.
On Tuesday, the gold price advanced $7.62, or 0.5%, to $1,651.69 per ounce amid a broad-based rally in precious metals. The spot price of gold reached a one-month high of $1,668.50 in overnight trading, but subsequently pared its gains as profit-taking ensued. The SPDR Gold Trust (GLD), the world’s largest gold ETF and a proxy for the gold price, finished higher by $1.24 at $160.50 per share.
The gold price held firm yesterday after Standard & Poor’s downgraded the European Financial Stability Facility (EFSF) to AA from AAA. The ratings agency cited the weakening creditworthiness of several nations providing financial guarantees to the EFSF as a key reason for the downgrade. RBC Capital Markets’ George Gero wrote in a note to clients that “The downgrades of the euro-zone countries means fiscal stimulus is not far behind.” Gero added that the price of gold will continue to be supported by currency devaluation concerns emanating from such stimulus measures.
Silver prices closed in the black yesterday as well, but well off their intra-day highs in concert with the gold price. The spot price of silver reached $30.57 in morning trading, but finished up just $0.07 at $30.06 per ounce. Other precious metals posted far greater gains, however. Platinum futures surged 2.6% to $1,526.80 per ounce while palladium jumped 3.0% to $654.23 per ounce.
In contrast to the gold price, gold equities fell victim to a host of disappointing developments from several of the world’s largest gold producers. The AMEX Gold Bugs Index (HUI) – a composite of the sector’s largest components – closed down by 1.5% at 511.51.
Barrick Gold (ABX) fell 0.7% to $48.00 per share after being downgraded by Canaccord Genuity to Hold from Buy and having its price target reduced to $57.50 from $61.50. In its report, Canaccord analyst Steven Butler contended that “inflationary pressures on capital/operating costs and likely long timelines could potentially result in diminished investment returns” on a number of Barrick’s gold projects.
The gold sector’s worst performer on Tuesday, however, was Kinross Gold (K.TSX, NYSE: KGC), which tumbled 18.8% to a 38-month low of $10.27 per share. Although the Canadian-based miner reported production results and guidance largely in-line with forecasts, several analysts expressed concerns over a significant increase in projected costs at many of Kinross’ development projects. Macquarie downgraded K.TSX to Neutral from Outperform and lowered its target to C$16.50 from C$19.50, while Dundee Securities reduced its target to C$12.50 from C$17.50 but maintained its Neutral rating.
On a bright note, two of the sector’s top performers moved higher alongside the gold price. AngloGold Ashanti (AU) rallied 2.6% to $44.12 per share and Gold Fields (GFI) climbed 2.5% to $15.87 per share.
Claude Resources Reports St. Eugene Shareholders Approve Acquisition
St. Eugene is a Toronto-based exploration company that is actively exploring for and developing gold properties, both in Manitoba and Saskatchewan. The Company’s three main assets are the Tartan Lake Gold Mine Project in Manitoba (100% interest), and, in Saskatchewan, the Amisk Gold Project (35% interest St. Eugene – 65% interest Claude) and the Amisk North Gold Project (100% interest). Full Claude Resources Press Release.
