GOLD PRICE NEWS – The gold price traded to a new all-time high early Wednesday morning, rising to $1,460.90 per ounce. Gold prices advanced for the third consecutive day as the U.S. dollar continued to plunge against its foreign counterparts. Silver prices touched $39.66 per ounce this morning, a 31-year high.
While the gold price rallied to a new record high, the silver price continued its outperformance. Gold’s sister precious metal is changing hands at its highest level since the Hunt Brothers attempted to corner the market in 1980. Despite a lot of headlines, the price of gold has gained a mere 3% year-to-date while silver has surged a huge 28% in 2011.
Gold and silver both moved higher yesterday despite China’s decision to raise interest rates for the fourth time since October 2010. Investment demand for precious metals has risen as confidence in the U.S. Federal Reserve’s ability to protect the value of the U.S. dollar has fallen.
Following yesterday’s worse than expected ISM Services report, the gold price surged from $1,430 to above $1,450 per ounce. In the process, the price of gold surpassed its previous record high of $1,448.60, posted on March 24, 2011. In afternoon trading, the gold price added to its gains after the release of the latest Fed minutes.
Gold and silver equities climbed higher in pre-market trading after the 4.4% rise in the Philadelphia Gold & Silver Index (XAU) yesterday. In doing so, the XAU, an index of the world’s largest gold and silver companies, posted its best day since a 4.7% surge on November 4, 2010. Combined with yesterday’s advance, the XAU is now higher by 4.8% this week. Two of the top performing names in the sector on Tuesday included Goldcorp (GG) and Randgold Resources (GOLD), which posted gains of 6.0% and 7.7%, respectively.
The latest Fed minutes, a transcript of the most recent Federal Open Market Committee (FOMC) meeting, helped propel the gold price toward $1,460 per ounce despite the appearance of an escalating debate at the central bank on the future course of monetary policy. “A few participants indicated that economic conditions might warrant a move toward less-accommodative monetary policy this year” according to the minutes, while, “a few others noted that exceptional policy accommodation could be appropriate beyond 2011.”
The Fed went on to say that “A few members remained uncertain about the benefits” of QE2, but determined that altering the asset purchase program at this time was “not appropriate.” The minutes also reiterated the overall dovish stance at the Fed, stating that it anticipates that “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, were likely to warrant exceptionally low levels for the federal funds rate for an extended period.”
Based on the positive reaction of the gold price to the Fed minutes, financial markets appear to be forecasting that not only will QE2 be brought to completion, but the possibility still exists that QE3 could be implemented at some point. Furthermore, the Fed continues to view deflation, rather than inflation, as its primary enemy, a fact that portends a favorable outlook for the gold price.
PREMIER GOLD MINES (PG.TSX) Premier Gold Mines (PG.TSX) announced the completion of an updated NI 43-101 compliant mineral resource estimate by Micon International Limited on its 70%-owned Hardrock Project, located in Northwestern Ontario, Canada. The estimate includes a substantial increase in all categories, including the use of a measured category for the first time. In 2010, there were 114,000 meters of drilling at Hardrock on multiple near surface and deeper zones. Several of these remain open for expansion and are the focus of an ongoing drill program in 2011.
Full Premier Gold MInes Press Release.
* Measured and Indicated resources increased by 269% to 2.5 million ounces of gold.
* Inferred resources increased 164% to 1.1 million ounces of gold.