The lofty price of gold helped more than triple the second-quarter profits of Glamis Gold Ltd. (GLG), even as cash costs rose, the company said on Monday.
The mid-tier gold miner earned $30.3 million, or 20 cents a share, in the quarter ended June 30, up from $8.2 million, or 6 cents a share, in the corresponding period a year earlier.
Profits were plumped by robust gold prices, with the company selling 145,468 ounces of the precious metal in the quarter at an average realized price of $624 per ounce, up from 112,810 ounces at $430 per ounce in the previous year.
Glamis said total gold production for the second quarter was 138,637 ounces at a total cash cost of $209 per ounce, up from 109,377 ounces at $190 per ounce a year earlier.
It confirmed total 2006 gold production of about 620,000 ounces at cash costs of approximately $190 per ounce.
"Their earnings are positively affected by some tax deferrals, a $7.7-million tax deferral and also some inventory sales during that period, but you take those things away and they're a little bit below expectations but that's fine," said Mark Smith, analyst at Dundee Securities Corp. in Toronto.
"It's really the go-forward numbers with Glamis that you're worried about, not the current."
Dundee Securities Corp. has an "outlook perform" rating on Glamis' stock, with a target price of C$51.50.
Glamis said its board had approved the construction of its Penasquito gold project in Mexico, with full operation of the mill and flotation circuit expected by late 2009.
"Pretty well, the results were in line with estimates -- a higher gold price -- that was expected," said John Ing, president of Maison Placements Canada in Toronto.
"They're betting the farm on Penasquito -- now they are in the development mode so the stock will go sideways relative to the other companies because it is in development mode."
Shares of Glamis were down 12 Canadian cents at C$41.49 in morning trading on the Toronto Stock Exchange.
Monday, July 31, 2006
Gold fell in London and New York after U.S. Secretary of State Condoleezza Rice said a cease-fire could be reached in the Middle East this week.
Some investors buy bullion as a haven in times of political tension. Gold climbed to an eight-week high of $676.53 an ounce five days after conflict broke out between Israel and Hezbollah on July 12. Bullion has since lost $40 an ounce.
``Buying that is related to conflicts doesn't tend to last that long,'' said David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London. ``The market is looking for opportunities to sell.''
Gold for immediate delivery in London fell 60 cents, or 0.1 percent, to $634.15 an ounce at 11:31 a.m. in London. Gold futures for delivery in December dropped $2.70, or 0.4 percent, to $645.10 an ounce on the Comex division of the New York Mercantile Exchange.
Some investors buy bullion as a haven in times of political tension. Gold climbed to an eight-week high of $676.53 an ounce five days after conflict broke out between Israel and Hezbollah on July 12. Bullion has since lost $40 an ounce.
``Buying that is related to conflicts doesn't tend to last that long,'' said David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London. ``The market is looking for opportunities to sell.''
Gold for immediate delivery in London fell 60 cents, or 0.1 percent, to $634.15 an ounce at 11:31 a.m. in London. Gold futures for delivery in December dropped $2.70, or 0.4 percent, to $645.10 an ounce on the Comex division of the New York Mercantile Exchange.
Sunday, July 30, 2006
Zimbabwe's gold mining sector has shrunk by almost 50% over the past three years due to the government's failure to set competitive market rates, says a top Chamber of Mines official.
Chamber of Mines president, Jack Murehwa, said gold mining has shrunk from 24 to 11 tonnes a year due to the lack of a competitive price as the government-set price was below the current market rates.
The Chamber of Mines president said this during an interview on the sidelines of the official opening of Mine Entra at the Zimbabwe International Trade Fair show grounds in Bulawayo.
"The mining industry is not showing any signs of improvement and has, in fact, shrunk over the past three years with gold mining, for example, going down from 24 tonnes to 11 tonnes a year.
"What has led to this situation is a scenario where one who takes his gold to the Reserve Bank of Zimbabwe gets far less than what he would have gotten on the parallel market," Murehwa said.
Murehwa said for the industry to be revived, the right environment and the right price had to be put in place.
Deputy Mines and Mining Development Minister, Tinos Rusere, who was also present at the official launch of the Mine Entra, confirmed that the gold mining sector had almost collapsed.
Rusere said the government could not match the competitive gold prices offered on the parallel market.
"Although it has shrunk, the government cannot be seen trying to match the prices offered by 'briefcase guys' offering better packages," Rusere said.
Expressing optimism over the future performance of the gold mining industry, he said the sector was expected to experience better fortunes if the government reviewed gold prices.
Chamber of Mines president, Jack Murehwa, said gold mining has shrunk from 24 to 11 tonnes a year due to the lack of a competitive price as the government-set price was below the current market rates.
The Chamber of Mines president said this during an interview on the sidelines of the official opening of Mine Entra at the Zimbabwe International Trade Fair show grounds in Bulawayo.
"The mining industry is not showing any signs of improvement and has, in fact, shrunk over the past three years with gold mining, for example, going down from 24 tonnes to 11 tonnes a year.
"What has led to this situation is a scenario where one who takes his gold to the Reserve Bank of Zimbabwe gets far less than what he would have gotten on the parallel market," Murehwa said.
Murehwa said for the industry to be revived, the right environment and the right price had to be put in place.
Deputy Mines and Mining Development Minister, Tinos Rusere, who was also present at the official launch of the Mine Entra, confirmed that the gold mining sector had almost collapsed.
Rusere said the government could not match the competitive gold prices offered on the parallel market.
"Although it has shrunk, the government cannot be seen trying to match the prices offered by 'briefcase guys' offering better packages," Rusere said.
Expressing optimism over the future performance of the gold mining industry, he said the sector was expected to experience better fortunes if the government reviewed gold prices.
Gold may rise for a second week on demand from investors concerned that a slowing U.S. economy and rising consumer prices will create stagflation for the first time since the early 1980s.
Twenty-one of 35 traders, investors and analysts surveyed by Bloomberg News from Sydney to Chicago on July 27 to July 28 advised buying gold, which rose 2.3 percent last week to $647.80 an ounce. Five suggested selling and nine were neutral.
U.S. consumers reined in spending during the second quarter as energy prices climbed, cutting growth by 50 percent compared with the first three months of the year, the government said July 28. A measure of inflation also rose the most since 1994. Gold reached a record $873 in 1980, after U.S. consumer prices surged 13.3 percent and the world's largest economy headed for a record decline.
``Stagflation is something that has the potential to exist again,'' said Katharine Pulvermacher, an economist at the producer-funded, London-based World Gold Council. ``There's a wide concern that we're heading into a recession at a time when we're seeing higher energy prices. Gold offers investors the opportunity to have a little insurance policy.''
Gold futures for December delivery rose $14.70 last week on the Comex division of the New York Mercantile Exchange. A majority of analysts surveyed July 20 and July 21 anticipated the gain. The Bloomberg survey has forecast the direction of prices accurately in 73 of 118 weeks, or 62 percent of the time.
Gold rose 50 percent in the past year, and reached a 26- year high of $732 on May 12, partly on speculation record-high energy costs would lead to accelerated inflation.
`Managing Risk'
The 2.5 percent growth in U.S. gross domestic product, the value of all goods and services produced in the U.S., compares with a 5.6 percent gain in the first three months of the year, the Commerce Department said.
``Investors have bought into gold as a way of managing risk,'' Pulvermacher said. During periods of stagflation, ``people become far more interested in real assets, and gold is a real asset.''
Gold may get a boost should the Federal Reserve conclude next month that the U.S. economy is slowing enough to warrant an end to the series of 17 consecutive interest-rate increases that began in June 2004.
A halt in rate increases would weaken the dollar. Gold traditionally moves in the opposite direction of the U.S. currency. The metal has gained 25 percent this year while the U.S. dollar dropped 6.3 percent against a basket of six major currencies.
Rising Costs
``If the Fed is almost done, what's the incentive for holding U.S. assets?'' said John Licata, chief investment strategist for Blue Phoenix Inc., a precious-metals and energy firm in New York. ``I don't expect the U.S. dollar to hold up and that's bullish for gold.''
Gold also may gain as higher energy costs spur inflation.
The government's personal consumption expenditures index, a measure of prices tied to consumer spending, rose at a 4.1 percent rate after a 2 percent rise in the first quarter. The index excluding food and energy, a measure favored by Fed policy makers, increased at a 2.9 percent annual rate after a 2.1 percent rise the previous quarter.
Oil may rise next week on concern the conflict between Israel and Hezbollah will widen and militant attacks will continue to curb shipments from Nigeria, a separate survey showed. Oil jumped to a record $78.40 a barrel on July 14 and prices are up 22 percent from a year ago.
`Inflation Play'
Oil surged in 1974, helping spur a recession in the developed world, after an oil embargo that followed the Arab- Israeli war in October 1973. Oil more than doubled in 1979 after Iran's revolution slashed the nation's exports. Gold climbed more than $600 in those years.
``Gold is an inflation play,'' Licata said. ``I would be buying oil right now and in turn, gold.''
Southern Lebanon, adjacent to Israel's northern border, is controlled by Hezbollah, a terrorist organization sponsored by Syria and Iran. A United Nations resolution calls for the group's disarmament and for the Lebanese army to take over the area. The group's kidnapping of two Israeli soldiers July 12 sparked the conflict.
Should fighting escalate in the Middle East, investors may buy gold as a way of avoiding risk, some analysts said. Iran is the fourth-largest oil producer.
``The geopolitical risk in the Middle East will prevent gold from being sold,'' said Mikikaru Amano, an analyst at Taiheiyo Bussan Co. in Tokyo. He expects gold to trade as high as $670.
Discounted Safe Haven
The safe-haven premium for gold has already been discounted, some analysts said. Gold reached a two-month high of $677.50 on July 17 when fighting escalated.
``Gold is considered a safe-haven vehicle, but it overreacted to the Middle East situation earlier this month,'' said William B. O'Neill, a partner at Logic Advisors LLC in Upper Saddle River, New Jersey. ``No oil production is being lost and the market is starting to discount the worst and an eventual cessation of violence.''
Wide price fluctuations may discourage buyers, some analysts said. After gold rallied to a 26-year high, prices plunged 25 percent to $546.40 on June 14. The metal's volatility, or the rate at which a price moves up and down, was 30 percent in the past 100 sessions, compared with 11 percent a year earlier.
``I am positive about gold in the longer term but at the moment my advice to clients is to stay out,'' said Ajoy Pathak, associate vice president at Kotak Securities Ltd. in Mumbai. ``The market is too choppy and the volatility has to subside.''
Twenty-one of 35 traders, investors and analysts surveyed by Bloomberg News from Sydney to Chicago on July 27 to July 28 advised buying gold, which rose 2.3 percent last week to $647.80 an ounce. Five suggested selling and nine were neutral.
U.S. consumers reined in spending during the second quarter as energy prices climbed, cutting growth by 50 percent compared with the first three months of the year, the government said July 28. A measure of inflation also rose the most since 1994. Gold reached a record $873 in 1980, after U.S. consumer prices surged 13.3 percent and the world's largest economy headed for a record decline.
``Stagflation is something that has the potential to exist again,'' said Katharine Pulvermacher, an economist at the producer-funded, London-based World Gold Council. ``There's a wide concern that we're heading into a recession at a time when we're seeing higher energy prices. Gold offers investors the opportunity to have a little insurance policy.''
Gold futures for December delivery rose $14.70 last week on the Comex division of the New York Mercantile Exchange. A majority of analysts surveyed July 20 and July 21 anticipated the gain. The Bloomberg survey has forecast the direction of prices accurately in 73 of 118 weeks, or 62 percent of the time.
Gold rose 50 percent in the past year, and reached a 26- year high of $732 on May 12, partly on speculation record-high energy costs would lead to accelerated inflation.
`Managing Risk'
The 2.5 percent growth in U.S. gross domestic product, the value of all goods and services produced in the U.S., compares with a 5.6 percent gain in the first three months of the year, the Commerce Department said.
``Investors have bought into gold as a way of managing risk,'' Pulvermacher said. During periods of stagflation, ``people become far more interested in real assets, and gold is a real asset.''
Gold may get a boost should the Federal Reserve conclude next month that the U.S. economy is slowing enough to warrant an end to the series of 17 consecutive interest-rate increases that began in June 2004.
A halt in rate increases would weaken the dollar. Gold traditionally moves in the opposite direction of the U.S. currency. The metal has gained 25 percent this year while the U.S. dollar dropped 6.3 percent against a basket of six major currencies.
Rising Costs
``If the Fed is almost done, what's the incentive for holding U.S. assets?'' said John Licata, chief investment strategist for Blue Phoenix Inc., a precious-metals and energy firm in New York. ``I don't expect the U.S. dollar to hold up and that's bullish for gold.''
Gold also may gain as higher energy costs spur inflation.
The government's personal consumption expenditures index, a measure of prices tied to consumer spending, rose at a 4.1 percent rate after a 2 percent rise in the first quarter. The index excluding food and energy, a measure favored by Fed policy makers, increased at a 2.9 percent annual rate after a 2.1 percent rise the previous quarter.
Oil may rise next week on concern the conflict between Israel and Hezbollah will widen and militant attacks will continue to curb shipments from Nigeria, a separate survey showed. Oil jumped to a record $78.40 a barrel on July 14 and prices are up 22 percent from a year ago.
`Inflation Play'
Oil surged in 1974, helping spur a recession in the developed world, after an oil embargo that followed the Arab- Israeli war in October 1973. Oil more than doubled in 1979 after Iran's revolution slashed the nation's exports. Gold climbed more than $600 in those years.
``Gold is an inflation play,'' Licata said. ``I would be buying oil right now and in turn, gold.''
Southern Lebanon, adjacent to Israel's northern border, is controlled by Hezbollah, a terrorist organization sponsored by Syria and Iran. A United Nations resolution calls for the group's disarmament and for the Lebanese army to take over the area. The group's kidnapping of two Israeli soldiers July 12 sparked the conflict.
Should fighting escalate in the Middle East, investors may buy gold as a way of avoiding risk, some analysts said. Iran is the fourth-largest oil producer.
``The geopolitical risk in the Middle East will prevent gold from being sold,'' said Mikikaru Amano, an analyst at Taiheiyo Bussan Co. in Tokyo. He expects gold to trade as high as $670.
Discounted Safe Haven
The safe-haven premium for gold has already been discounted, some analysts said. Gold reached a two-month high of $677.50 on July 17 when fighting escalated.
``Gold is considered a safe-haven vehicle, but it overreacted to the Middle East situation earlier this month,'' said William B. O'Neill, a partner at Logic Advisors LLC in Upper Saddle River, New Jersey. ``No oil production is being lost and the market is starting to discount the worst and an eventual cessation of violence.''
Wide price fluctuations may discourage buyers, some analysts said. After gold rallied to a 26-year high, prices plunged 25 percent to $546.40 on June 14. The metal's volatility, or the rate at which a price moves up and down, was 30 percent in the past 100 sessions, compared with 11 percent a year earlier.
``I am positive about gold in the longer term but at the moment my advice to clients is to stay out,'' said Ajoy Pathak, associate vice president at Kotak Securities Ltd. in Mumbai. ``The market is too choppy and the volatility has to subside.''
Saturday, July 29, 2006
Centerra Gold Inc. reported a higher second-quarter profit on strong gold prices on Thursday, but lowered its production outlook for the year.
Centerra, which has interests in gold operations in Central Asia, said it earned US$29 million, or 13 cents a share, in the three months ended June 30. That compared with a profit of $15 million, or 7 cents a share, in the year-earlier period.
The company, majority owned by uranium producer Cameco Corp., had forecast production of between 680,000 and 695,000 ounces of gold this year. But it said on Thursday output would be lower than expected due to ground movement at its Kumtor mine in July.
The company said it now expects production in 2006 of 570,000 to 575,000 ounces of gold, with total cash costs expected to be between $370 to $380 per ounce.
Centerra, which has interests in gold operations in Central Asia, said it earned US$29 million, or 13 cents a share, in the three months ended June 30. That compared with a profit of $15 million, or 7 cents a share, in the year-earlier period.
The company, majority owned by uranium producer Cameco Corp.
The company said it now expects production in 2006 of 570,000 to 575,000 ounces of gold, with total cash costs expected to be between $370 to $380 per ounce.
Inco Drops Bid for Falconbridge, Marking Victory for Xstrata in Mining Takeover Battle
Canadian nickel miner Inco Ltd. said Friday it is dropping out of the bidding war for rival Falconbridge Ltd., opening the door for Anglo-Swiss mining company Xstrata PLC to move ahead with its hostile takeover of Falconbridge.
Inco said its $17.3 billion bid for Falconbridge failed because not enough shares were tendered by midnight Thursday, and it has instructed depositary CIBC Mellon Trust Co. to return all shares that were tendered. The company didn't say how many shares were tendered, but the minimum tender condition for its stock-and-cash bid was 50.01 percent.
"Though a large number of Falconbridge shareholders supported our offer, unfortunately it wasn't enough," said Scott Hand, chairman and CEO of Inco. "This is disappointing news for the many people at Inco and Falconbridge who have worked very hard to realize this transaction and create what we believe would have been a truly great mining company. But the Falconbridge shareholders have spoken, and we're moving on."
Falconbridge said its board will meet to review the latest developments and Investment Canada's approval of the takeover by Xstrata. The company said it would later provide its shareholders with a formal recommendation.
Inco's shares rose $2.50, or 3.4 percent, to close at $76.40 on the New York Stock Exchange. Falconbridge shares rose 36 cents to finish at $55.02.
The termination of the deal came a day after Xstrata stepped up its efforts to acquire Falconbridge.
On Thursday, Xstrata, which already owns about 20 percent of Falconbridge, said it planned to buy up to another 5 percent of the company's shares. Last week, Xstrata raised its hostile bid to acquire the remaining 80 percent of Falconbridge to $16.9 billion in cash and its offer now values all of Falconbridge at $21.24 billion.
Xstrata welcomed the news that Falconbridge shareholders had rejected the Inco offer and urged that they tender their shares to Xstrata's all-cash offer by Aug 14.
"The success of Xstrata's offer is the best outcome for Falconbridge stakeholders, including, in particular, shareholders and employees," said Xstrata Chief Executive Mick Davis in a statement.
Inco said it is now turning its attention to completing its takeover by Phoenix-based copper miner Phelps Dodge Inc. to create "a global powerhouse in nickel and copper."
The company said the offer from Phelps is "clearly superior to the competing bid for Inco put forward by Teck Cominco." Vancouver-based Teck Cominco Ltd. has also launched a hostile takeover attempt for Inco.
Phelps Dodge Inco would be the world's second-largest nickel producer, one of the world's largest copper producers, and a leading producer of molybdenum and cobalt. Shares of Phelps Dodge rose $2.99, or 3.8 percent, to $81.07 on the NYSE.
Steven Whisler, chairman and chief executive officer of Phelps Dodge, said the company was disappointed that the Falconbridge deal had fallen through.
"However, we are excited about our agreed combination with Inco, which will create both the world's leading base metals company and a must-own stock for investors who want exposure to our leading positions in copper and nickel," he said in a statement.
Under terms of Inco's agreement with Falconbridge, Inco will receive $150 million as a result of the failure to meet the minimum tender condition. Inco will receive a further break-up fee of $300 million in the event that Xstrata succeeds in acquiring Falconbridge.
Inco had also agreed to sell the Nikkelverk refinery and other assets to LionOre Mining International Ltd., in the event its bid for Falconbridge was accepted. Because of the failed result, Inco must pay a break-up fee of $32.5 million to LionOre.
Canadian nickel miner Inco Ltd. said Friday it is dropping out of the bidding war for rival Falconbridge Ltd., opening the door for Anglo-Swiss mining company Xstrata PLC to move ahead with its hostile takeover of Falconbridge.
Inco said its $17.3 billion bid for Falconbridge failed because not enough shares were tendered by midnight Thursday, and it has instructed depositary CIBC Mellon Trust Co. to return all shares that were tendered. The company didn't say how many shares were tendered, but the minimum tender condition for its stock-and-cash bid was 50.01 percent.
"Though a large number of Falconbridge shareholders supported our offer, unfortunately it wasn't enough," said Scott Hand, chairman and CEO of Inco. "This is disappointing news for the many people at Inco and Falconbridge who have worked very hard to realize this transaction and create what we believe would have been a truly great mining company. But the Falconbridge shareholders have spoken, and we're moving on."
Falconbridge said its board will meet to review the latest developments and Investment Canada's approval of the takeover by Xstrata. The company said it would later provide its shareholders with a formal recommendation.
Inco's shares rose $2.50, or 3.4 percent, to close at $76.40 on the New York Stock Exchange. Falconbridge shares rose 36 cents to finish at $55.02.
The termination of the deal came a day after Xstrata stepped up its efforts to acquire Falconbridge.
On Thursday, Xstrata, which already owns about 20 percent of Falconbridge, said it planned to buy up to another 5 percent of the company's shares. Last week, Xstrata raised its hostile bid to acquire the remaining 80 percent of Falconbridge to $16.9 billion in cash and its offer now values all of Falconbridge at $21.24 billion.
Xstrata welcomed the news that Falconbridge shareholders had rejected the Inco offer and urged that they tender their shares to Xstrata's all-cash offer by Aug 14.
"The success of Xstrata's offer is the best outcome for Falconbridge stakeholders, including, in particular, shareholders and employees," said Xstrata Chief Executive Mick Davis in a statement.
Inco said it is now turning its attention to completing its takeover by Phoenix-based copper miner Phelps Dodge Inc. to create "a global powerhouse in nickel and copper."
The company said the offer from Phelps is "clearly superior to the competing bid for Inco put forward by Teck Cominco." Vancouver-based Teck Cominco Ltd. has also launched a hostile takeover attempt for Inco.
Phelps Dodge Inco would be the world's second-largest nickel producer, one of the world's largest copper producers, and a leading producer of molybdenum and cobalt. Shares of Phelps Dodge rose $2.99, or 3.8 percent, to $81.07 on the NYSE.
Steven Whisler, chairman and chief executive officer of Phelps Dodge, said the company was disappointed that the Falconbridge deal had fallen through.
"However, we are excited about our agreed combination with Inco, which will create both the world's leading base metals company and a must-own stock for investors who want exposure to our leading positions in copper and nickel," he said in a statement.
Under terms of Inco's agreement with Falconbridge, Inco will receive $150 million as a result of the failure to meet the minimum tender condition. Inco will receive a further break-up fee of $300 million in the event that Xstrata succeeds in acquiring Falconbridge.
Inco had also agreed to sell the Nikkelverk refinery and other assets to LionOre Mining International Ltd., in the event its bid for Falconbridge was accepted. Because of the failed result, Inco must pay a break-up fee of $32.5 million to LionOre.
Friday, July 28, 2006
The spot price of gold on Friday afternoon was higher in thin, volatile trade with thoughts about US interest rates continuing to drive the currency markets and in turn gold, traders said.
By late afternoon, gold was quoted at $637 a troy ounce, up $3.49/oz from the previous close. The euro was last quoted at $1.2738, up $0.040 from the unit's late trade on Thursday.
"Gold is up, down and round about. The market is interest rate driven. When the market thinks that the Fed is going to increase interest rates then the US dollar strengthens and the gold price falls, when the market becomes concerned that that the Fed is not going to hike rates then the dollar slops and gold goes up," a London-based trader said.
Range bound for now
Barring any sudden and unexpected weakening of the US dollar, UBS does not see any short-term catalyst to break gold and the other precious metals out of the current ranges, London-based UBS analysts John Reade wrote.
"While we see higher metal prices in the fourth quarter and into 2007, the balance of the Northern Hemisphere summer may see light, whippy trading," Reade added.
The gold market has established a clear range over the last few weeks between $600/oz to $675/oz and this range was likely to hold in the coming month, Absa/Barclays technical analysts wrote.
Gold prices retreated from the highs on the Tokyo Commodity Exchange and in London after the failure to break through the technical resistance level of $640/oz dampened market sentiment and sparked some profit taking ahead of the weekend, Absa/Barclays commodity analysts wrote.
Gold 'wary'
"Market participants were also cautious in the wake of the volatility seen in the EUR/USD this week," the bank added.
There was also continued uncertainty over the extent and the pace of US Federal Reserve tightening had been triggering sharp movements in the US dollar, in face of very little evidence in support of either view, Absa/Barclays analysts wrote.
"Although momentum seems to be gathering, we expect gold markets to remain wary to build large long positions, waiting instead for new fresh economic data to provide a better indication for the future of US Federal Open Market Committee (FOMC) policy path," the bank said.
"Traders seem reluctant to build substantial longs, which is likely to confine gold to its current $600/oz to $655/oz range for some time," UK-based TheBullionDesk.com analysts James Moore wrote.
Rates 'in focus'
"The prospect of the US Fed pausing in their rate hiking cycle following a probable 25 basis point hike in the next FOMC meeting should certainly continue to weigh on the US dollar and in turn support the yellow metal. This however hinges on the fact that interest rates remain in focus, as should growth be brought into the spotlight and a relatively robust US economy might limit losses on the greenback in the coming weeks," Johannesburg-based ETM analysts wrote.
Platinum was last quoted at $1218/oz, down $9/oz from Thursday's close, while palladium was last quoted at $311/oz, down $1.50/oz from the previous close.
"Platinum and palladium remain range bound although palladium continues to struggle to rally," Reade wrote.
The thinner holiday market conditions at the moment were likely to confine both platinum and palladium to their current ranges, with platinum trading between $1200/oz and $1250/oz and palladium trading between $300/oz and $330/oz, Moore wrote.
"Platinum remains the stronger of the two metals given the market supply and demand fundamentals," he added.
By late afternoon, gold was quoted at $637 a troy ounce, up $3.49/oz from the previous close. The euro was last quoted at $1.2738, up $0.040 from the unit's late trade on Thursday.
"Gold is up, down and round about. The market is interest rate driven. When the market thinks that the Fed is going to increase interest rates then the US dollar strengthens and the gold price falls, when the market becomes concerned that that the Fed is not going to hike rates then the dollar slops and gold goes up," a London-based trader said.
Range bound for now
Barring any sudden and unexpected weakening of the US dollar, UBS does not see any short-term catalyst to break gold and the other precious metals out of the current ranges, London-based UBS analysts John Reade wrote.
"While we see higher metal prices in the fourth quarter and into 2007, the balance of the Northern Hemisphere summer may see light, whippy trading," Reade added.
The gold market has established a clear range over the last few weeks between $600/oz to $675/oz and this range was likely to hold in the coming month, Absa/Barclays technical analysts wrote.
Gold prices retreated from the highs on the Tokyo Commodity Exchange and in London after the failure to break through the technical resistance level of $640/oz dampened market sentiment and sparked some profit taking ahead of the weekend, Absa/Barclays commodity analysts wrote.
Gold 'wary'
"Market participants were also cautious in the wake of the volatility seen in the EUR/USD this week," the bank added.
There was also continued uncertainty over the extent and the pace of US Federal Reserve tightening had been triggering sharp movements in the US dollar, in face of very little evidence in support of either view, Absa/Barclays analysts wrote.
"Although momentum seems to be gathering, we expect gold markets to remain wary to build large long positions, waiting instead for new fresh economic data to provide a better indication for the future of US Federal Open Market Committee (FOMC) policy path," the bank said.
"Traders seem reluctant to build substantial longs, which is likely to confine gold to its current $600/oz to $655/oz range for some time," UK-based TheBullionDesk.com analysts James Moore wrote.
Rates 'in focus'
"The prospect of the US Fed pausing in their rate hiking cycle following a probable 25 basis point hike in the next FOMC meeting should certainly continue to weigh on the US dollar and in turn support the yellow metal. This however hinges on the fact that interest rates remain in focus, as should growth be brought into the spotlight and a relatively robust US economy might limit losses on the greenback in the coming weeks," Johannesburg-based ETM analysts wrote.
Platinum was last quoted at $1218/oz, down $9/oz from Thursday's close, while palladium was last quoted at $311/oz, down $1.50/oz from the previous close.
"Platinum and palladium remain range bound although palladium continues to struggle to rally," Reade wrote.
The thinner holiday market conditions at the moment were likely to confine both platinum and palladium to their current ranges, with platinum trading between $1200/oz and $1250/oz and palladium trading between $300/oz and $330/oz, Moore wrote.
"Platinum remains the stronger of the two metals given the market supply and demand fundamentals," he added.
Gold bounced back in Europe on Friday as the dollar sharply fell after a government report showed weaker-than-expected U.S. economic growth in the second quarter, lowering expectations for an interest rate hike.
Spot gold fell as low as $625.60 an ounce before rebounding to $636.00/637.50 by 1411 GMT, against $633.50/634.25 in New York late on Thursday.
"It's following the dollar today. The figures came out and there was a complete reversal," said a metals dealer in London.
"Going into the weekend, you never know what's going to go on and a lot of people buy as a bit of insurance. At the moment gold is looking good and if it takes out $645, you can have further moves up," he added.
The U.S. Gross domestic product grew at a 2.5 percent annual rate in the April-June quarter, well below Wall Street analysts' forecasts for 3 percent and less than half the robust 5.6 percent rate registered in the first quarter.
The U.S. Federal Reserve has signalled it expects an economic slowdown to cool inflation, stoking expectations of a pause in a two-year credit tightening campaign.
A rise in the interest rate tends to help the dollar and is generally negative for gold. Gold often moves in the opposite direction to the U.S. currency as some people use it as an alternative investment.
Some traders said people were nervous in the market because of a lack of clear direction and gold was expected to remain to volatile in the coming days.
"Going forward, dollar movements will likely dictate near-term gold direction," HSBC Bank said in a daily note.
Traders said concerns over the situation in the Middle East may prevent gold from falling sharply.
Intense Israeli bombardment killed 13 people in Lebanon on Friday, while U.S. Secretary of State Condoleezza Rice said she would return to the region only when the time was right for a lasting solution to the crisis.
Oil fell below $75 a barrel, but concerns about a prolonged cut in Nigerian oil output and violence in the Middle East were expected to limit selling.
Gold is generally seen as a hedge against inflation.
In other metals, platinum fell to $1,216/1,221 an ounce from $1,227/1,233 in New York, while palladium was at $309/314 an ounce, down from $313/318 in New York.
Silver inched down to $11.28/11.38 an ounce from $11.32/11.42.
Spot gold fell as low as $625.60 an ounce before rebounding to $636.00/637.50 by 1411 GMT, against $633.50/634.25 in New York late on Thursday.
"It's following the dollar today. The figures came out and there was a complete reversal," said a metals dealer in London.
"Going into the weekend, you never know what's going to go on and a lot of people buy as a bit of insurance. At the moment gold is looking good and if it takes out $645, you can have further moves up," he added.
The U.S. Gross domestic product grew at a 2.5 percent annual rate in the April-June quarter, well below Wall Street analysts' forecasts for 3 percent and less than half the robust 5.6 percent rate registered in the first quarter.
The U.S. Federal Reserve has signalled it expects an economic slowdown to cool inflation, stoking expectations of a pause in a two-year credit tightening campaign.
A rise in the interest rate tends to help the dollar and is generally negative for gold. Gold often moves in the opposite direction to the U.S. currency as some people use it as an alternative investment.
Some traders said people were nervous in the market because of a lack of clear direction and gold was expected to remain to volatile in the coming days.
"Going forward, dollar movements will likely dictate near-term gold direction," HSBC Bank said in a daily note.
Traders said concerns over the situation in the Middle East may prevent gold from falling sharply.
Intense Israeli bombardment killed 13 people in Lebanon on Friday, while U.S. Secretary of State Condoleezza Rice said she would return to the region only when the time was right for a lasting solution to the crisis.
Oil fell below $75 a barrel, but concerns about a prolonged cut in Nigerian oil output and violence in the Middle East were expected to limit selling.
Gold is generally seen as a hedge against inflation.
In other metals, platinum fell to $1,216/1,221 an ounce from $1,227/1,233 in New York, while palladium was at $309/314 an ounce, down from $313/318 in New York.
Silver inched down to $11.28/11.38 an ounce from $11.32/11.42.
Thursday, July 27, 2006
Gold producer Newmont Mining Corp. (NEM) on Thursday said quarterly profit nearly doubled as the gold price remained sky-high, but the results fell short of Wall Street expectations and the company's stock fell.
Despite higher bullion prices, Newmont sold less gold in the quarter than a year earlier. It said sales were likely to be lower in the third quarter than in the fourth.
Denver-based Newmont reported net income from continuing operations of $161 million, or 36 cents per share, for the second quarter, compared with $88 million, or 20 cents per share, a year earlier. Revenue rose to $1.31 billion from $997 million.
Excluding one-time items, such as prepaid forward deliveries, Australian tax consolidation and litigation stemming from environmental issues in Indonesia, the company earned 44 cents per share, including stock options expense of 1 cent per share. Analysts' average forecast was 49 cents, according to Reuters Estimates, which excludes stock options expense.
Newmont spokesman Randy Engel said the company fell short of Wall Street forecasts because of "slightly lower sales and production levels and slightly higher costs."
J. Taylor, who publishes the industry newsletter Gold & Technology Stocks, suggested Wall Street may have expected too much from Newmont, as the price of gold surged over 40 percent in the first five months of the year, from $513 to $730 per ounce.
Gold has been driven higher by speculators and by investors seeking a safe haven at a time when the dollar is weak and violence is rocking the Middle East. The metal was trading at around $634 an ounce on Thursday in New York.
Peter Schiff, president of broker-dealer Euro Pacific Capital in Darien, Connecticut, said that although gold is selling high, it does not automatically translate into higher profits for gold miners because of the higher cost of mining.
"There may be some skepticism (on Wall Street). People were very bullish when gold went through $700 but threw in the towel when it fell back.
"(But) the chart looks very good for Newmont and I see more positive reaction (from Wall St) soon. Gold and silver look strong and the mining stocks have tracked well," said Schiff, who predicted gold would pass $800 in the near future.
"Then you'll see profits and dividends build up."
Consolidated gold sales were 1.87 million ounces. Of that total, 1.38 million ounces were "equity ounces" -- gold owned outright by Newmont -- and the rest was from joint operations in mines in Peru and Indonesia.
But those figures were down from a year earlier, when consolidated sales were 1.99 million ounces, with 1.54 million equity ounces.
The revenue figures were based on costs applicable to sales of $298 per ounce, and an average realized price of $605 per ounce, Newmont said.
The company expects to sell 5.9 million to 6.2 million equity ounces of gold this year at costs of $290 to $310 per ounce, and 225 million to 235 million equity pounds of copper at costs of 65 to 70 cents per pound.
Gold and copper sales are expected to be stronger in the fourth quarter than in the third, with sales dependent on the ramp-up at the company's Phoenix and Leeville mines in Nevada and Ahafo, Ghana.
Chairman and Chief Executive Officer Wayne Murdy noted that net income from continuing operations more than doubled in the first half as the price of gold jumped.
"We also achieved project milestones in Ghana and Nevada, with initial processing at our Ahafo and Phoenix (mining) operations," he said.
He also announced the third-quarter sale of Newmont's Black Gold oil sands property in Alberta, Canada, for $280 million.
Newmont stock was down $1.71 or 3.2 percent at $51.32 in afternoon trade on the New York Stock Exchange.
Despite higher bullion prices, Newmont sold less gold in the quarter than a year earlier. It said sales were likely to be lower in the third quarter than in the fourth.
Denver-based Newmont reported net income from continuing operations of $161 million, or 36 cents per share, for the second quarter, compared with $88 million, or 20 cents per share, a year earlier. Revenue rose to $1.31 billion from $997 million.
Excluding one-time items, such as prepaid forward deliveries, Australian tax consolidation and litigation stemming from environmental issues in Indonesia, the company earned 44 cents per share, including stock options expense of 1 cent per share. Analysts' average forecast was 49 cents, according to Reuters Estimates, which excludes stock options expense.
Newmont spokesman Randy Engel said the company fell short of Wall Street forecasts because of "slightly lower sales and production levels and slightly higher costs."
J. Taylor, who publishes the industry newsletter Gold & Technology Stocks, suggested Wall Street may have expected too much from Newmont, as the price of gold surged over 40 percent in the first five months of the year, from $513 to $730 per ounce.
Gold has been driven higher by speculators and by investors seeking a safe haven at a time when the dollar is weak and violence is rocking the Middle East. The metal was trading at around $634 an ounce on Thursday in New York.
Peter Schiff, president of broker-dealer Euro Pacific Capital in Darien, Connecticut, said that although gold is selling high, it does not automatically translate into higher profits for gold miners because of the higher cost of mining.
"There may be some skepticism (on Wall Street). People were very bullish when gold went through $700 but threw in the towel when it fell back.
"(But) the chart looks very good for Newmont and I see more positive reaction (from Wall St) soon. Gold and silver look strong and the mining stocks have tracked well," said Schiff, who predicted gold would pass $800 in the near future.
"Then you'll see profits and dividends build up."
Consolidated gold sales were 1.87 million ounces. Of that total, 1.38 million ounces were "equity ounces" -- gold owned outright by Newmont -- and the rest was from joint operations in mines in Peru and Indonesia.
But those figures were down from a year earlier, when consolidated sales were 1.99 million ounces, with 1.54 million equity ounces.
The revenue figures were based on costs applicable to sales of $298 per ounce, and an average realized price of $605 per ounce, Newmont said.
The company expects to sell 5.9 million to 6.2 million equity ounces of gold this year at costs of $290 to $310 per ounce, and 225 million to 235 million equity pounds of copper at costs of 65 to 70 cents per pound.
Gold and copper sales are expected to be stronger in the fourth quarter than in the third, with sales dependent on the ramp-up at the company's Phoenix and Leeville mines in Nevada and Ahafo, Ghana.
Chairman and Chief Executive Officer Wayne Murdy noted that net income from continuing operations more than doubled in the first half as the price of gold jumped.
"We also achieved project milestones in Ghana and Nevada, with initial processing at our Ahafo and Phoenix (mining) operations," he said.
He also announced the third-quarter sale of Newmont's Black Gold oil sands property in Alberta, Canada, for $280 million.
Newmont stock was down $1.71 or 3.2 percent at $51.32 in afternoon trade on the New York Stock Exchange.
World number three gold miner AngloGold Ashanti expected that the gold price would trade at current levels or higher for the foreseeable future, AngloGold Ashanti chief executive officer Bobby Godsell said on Thursday.
At 1.10pm, gold was quoted at $633.29 a troy ounce, up $10.45/oz from Wednesday's close and in May gold traded to $730.30/oz, the highest level for gold in dollar terms since January 1980, when gold fixed at a high of $850/oz.
In rand terms, gold was last quoted at R140 089 per kilogram after trading to an all-time high above R155 000/kg earlier in July.
The supply-and-demand position for gold was favourable, with very strong investor interest in the metal, Godsell said.
'Demand as strong as ever'
"The demand for gold is as strong as it ever has been," he added.
AngloGold Ashanti treasurer Mark Lynam said the outlook for the gold price was positive.
However, with the gains in the gold price, jewellery demand was under pressure, he added.
An estimated $90-billion in fund interest had moved into commodities and gold had benefited from this, Lynam said.
"As with the first quarter of 2006, the sharp price moves in the gold market experienced during the second quarter, has seen some weakness in key consumer markets such as Turkey and India, together with a shift by manufacturers to lower gold content in manufactured products," AngloGold Ashanti said in its June quarter report.
"Higher metal prices have also been accompanied by an influx of gold scrap into refineries, with the new secondary refineries in Dubai being the major beneficiaries," the group added.
Investment markets strong
"In contrast to a slightly weaker jewellery market, the investment market for gold has remained strong, notwithstanding a general pull-back in commodities and precious metals investing in mid-May," AngloGold Ashanti said.
Gold exchange traded funds grew by some 45 tons during the June quarter, with the increase year-to-date some 149 tons, the group added.
Central bank selling of gold appeared to have been low since January 2006, AngloGold Ashanti said.
Sales have amounted to be between 30 tons and 35 tons for the June quarter
At 1.10pm, gold was quoted at $633.29 a troy ounce, up $10.45/oz from Wednesday's close and in May gold traded to $730.30/oz, the highest level for gold in dollar terms since January 1980, when gold fixed at a high of $850/oz.
In rand terms, gold was last quoted at R140 089 per kilogram after trading to an all-time high above R155 000/kg earlier in July.
The supply-and-demand position for gold was favourable, with very strong investor interest in the metal, Godsell said.
'Demand as strong as ever'
"The demand for gold is as strong as it ever has been," he added.
AngloGold Ashanti treasurer Mark Lynam said the outlook for the gold price was positive.
However, with the gains in the gold price, jewellery demand was under pressure, he added.
An estimated $90-billion in fund interest had moved into commodities and gold had benefited from this, Lynam said.
"As with the first quarter of 2006, the sharp price moves in the gold market experienced during the second quarter, has seen some weakness in key consumer markets such as Turkey and India, together with a shift by manufacturers to lower gold content in manufactured products," AngloGold Ashanti said in its June quarter report.
"Higher metal prices have also been accompanied by an influx of gold scrap into refineries, with the new secondary refineries in Dubai being the major beneficiaries," the group added.
Investment markets strong
"In contrast to a slightly weaker jewellery market, the investment market for gold has remained strong, notwithstanding a general pull-back in commodities and precious metals investing in mid-May," AngloGold Ashanti said.
Gold exchange traded funds grew by some 45 tons during the June quarter, with the increase year-to-date some 149 tons, the group added.
Central bank selling of gold appeared to have been low since January 2006, AngloGold Ashanti said.
Sales have amounted to be between 30 tons and 35 tons for the June quarter
The world's third biggest gold producer AngloGold Ashanti Ltd on Thursday unveiled a 63 percent rise in second-quarter adjusted earnings to $140 million.
Earnings per share, excluding non-realized financial effects from derivatives at the South African gold producer, rose to 51 U.S. cents for the three months to June from 32 cents in the previous quarter, AngloGold said in a statement.
This was below a mean forecast of 56 cents, with a range of 46 to 69 U.S. cents, from eight analysts polled by Reuters.
AngloGold said earnings were up due to higher output, which rose by 6 percent to 1.415 million ounces of gold, with total cash costs down 1.0 percent to $305/oz.
A higher gold price also contributed to the improved results, with the price up 10 percent to $600/oz.
Earnings per share, excluding non-realized financial effects from derivatives at the South African gold producer, rose to 51 U.S. cents for the three months to June from 32 cents in the previous quarter, AngloGold said in a statement.
This was below a mean forecast of 56 cents, with a range of 46 to 69 U.S. cents, from eight analysts polled by Reuters.
AngloGold said earnings were up due to higher output, which rose by 6 percent to 1.415 million ounces of gold, with total cash costs down 1.0 percent to $305/oz.
A higher gold price also contributed to the improved results, with the price up 10 percent to $600/oz.
Wednesday, July 26, 2006
Precious metals miner Compania de Minas Buenaventura SAA's (BVN) said Wednesday that it had second- quarter net earnings of $138.1 million, or $1.09 per share, above the $77.2 million, or $0.61 per share, posted in the same quarter a year before.
Total revenues were $168.6 million in the second quarter compared with $88.1 million in the same quarter of the previous year, the company said in a press release.
Buenaventura has a 43.65% stake in the giant Minera Yanacocha SRL gold mine, which is operated by Newmont Mining Corp. (NEM).
Buenaventura also operates a number of smaller mines in Peru.
Total revenues were $168.6 million in the second quarter compared with $88.1 million in the same quarter of the previous year, the company said in a press release.
Buenaventura has a 43.65% stake in the giant Minera Yanacocha SRL gold mine, which is operated by Newmont Mining Corp. (NEM).
Buenaventura also operates a number of smaller mines in Peru.
Gold rose in New York on speculation higher energy costs this summer will boost demand for the metal as a hedge against inflation.
Gold and oil have moved mostly in lockstep this year, climbing 22 percent. The average U.S. pump price for regular gasoline is 31 percent higher than a year ago and natural gas surged 21 percent in the past week as heat waves across the U.S. spurred demand. Some investors buy gold as an inflation hedge when the cost of energy increases.
``Rising energy prices could help push the gold market higher,'' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``Gold is still in an upward trend.''
Gold futures for December delivery, the most-actively traded contract, rose $4, or 0.6 percent, to $634.70 an ounce on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Some traders look at oil prices to gauge demand for gold. The metal reached $873 an ounce in January 1980, the highest ever, after oil doubled in a year, spurring 12 percent inflation.
Gold is still cheaper than oil, some analysts said. Dennis Gartman, gold trader, economist and editor of the Suffolk, Virginia-based Gartman Letter, recommends being long three units of gold and short three units of oil.
It now takes about eight barrels of oil to buy an ounce of gold, compared with the 1970s, when it took more than 20 barrels.
Mideast Violence
Gold prices may remain above $600 because of fighting between Israel and Hezbollah in Lebanon, some traders said. Investors sometimes buy gold as a haven asset during times of political unrest.
Gold climbed to $677.50 an ounce on July 17, a two-month high, as the conflict escalated. A summit in Rome ended today without an immediate cease-fire to the conflict.
``Gold will not go lower until we see some resolution of the situation in the Middle East,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.
Fighting in southern Lebanon between Israel and Hezbollah, a terrorist group backed by Iran and Syria, entered its third week. A UN resolution calls for the disarmament of Hezbollah and for the Lebanese army to take over the area. Hezbollah's capture of two Israeli soldiers in a cross-border attack July 12 sparked the conflict.
Weaker Dollar
A weaker U.S. dollar also helped boost gold prices.
Gold generally moves in the opposite direction of the dollar. The dollar index, down 5 percent for the year, fell today after a policy maker at the Bank of Japan said the central bank may raise interest rates a second time this year, narrowing the gap in rates between the two currencies.
``The dollar is a little weaker and that may boost gold's prospects,'' Kaplan said.
Participation in the futures market was lower today as the August futures contract expires, analysts said.
Gold and oil have moved mostly in lockstep this year, climbing 22 percent. The average U.S. pump price for regular gasoline is 31 percent higher than a year ago and natural gas surged 21 percent in the past week as heat waves across the U.S. spurred demand. Some investors buy gold as an inflation hedge when the cost of energy increases.
``Rising energy prices could help push the gold market higher,'' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``Gold is still in an upward trend.''
Gold futures for December delivery, the most-actively traded contract, rose $4, or 0.6 percent, to $634.70 an ounce on the Comex division of the New York Mercantile Exchange. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Some traders look at oil prices to gauge demand for gold. The metal reached $873 an ounce in January 1980, the highest ever, after oil doubled in a year, spurring 12 percent inflation.
Gold is still cheaper than oil, some analysts said. Dennis Gartman, gold trader, economist and editor of the Suffolk, Virginia-based Gartman Letter, recommends being long three units of gold and short three units of oil.
It now takes about eight barrels of oil to buy an ounce of gold, compared with the 1970s, when it took more than 20 barrels.
Mideast Violence
Gold prices may remain above $600 because of fighting between Israel and Hezbollah in Lebanon, some traders said. Investors sometimes buy gold as a haven asset during times of political unrest.
Gold climbed to $677.50 an ounce on July 17, a two-month high, as the conflict escalated. A summit in Rome ended today without an immediate cease-fire to the conflict.
``Gold will not go lower until we see some resolution of the situation in the Middle East,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.
Fighting in southern Lebanon between Israel and Hezbollah, a terrorist group backed by Iran and Syria, entered its third week. A UN resolution calls for the disarmament of Hezbollah and for the Lebanese army to take over the area. Hezbollah's capture of two Israeli soldiers in a cross-border attack July 12 sparked the conflict.
Weaker Dollar
A weaker U.S. dollar also helped boost gold prices.
Gold generally moves in the opposite direction of the dollar. The dollar index, down 5 percent for the year, fell today after a policy maker at the Bank of Japan said the central bank may raise interest rates a second time this year, narrowing the gap in rates between the two currencies.
``The dollar is a little weaker and that may boost gold's prospects,'' Kaplan said.
Participation in the futures market was lower today as the August futures contract expires, analysts said.
The price of silver could increase about 40 per cent over the next 18 months and investors should buy shares in three Canadian silver companies that will benefit as the commodity catches up in price with the other precious metals, according to UBS Securities Canada Inc.
If you are an investor who likes gold, and believe that the U.S. dollar will weaken, then North American silver producers could be a good bet, said Craig West, an analyst at UBS Securities Canada.
But expect volatility, because the silver market is substantially smaller than either the gold or base metal markets and that can lead to exaggerated swings up or down, he said.
In a report to clients, Mr. West recommended Silver Wheaton Corp. (SLW), Pan American Silver Corp. (PAAS) and Silver Standard Resources Ltd. (SSRI) as “buys.” He rated Coeur d'Alene Mines Corp. (CDE-NYSE) “neutral.”
Silver traded today at $11.05 (U.S.) an ounce down from $15.20 in May after it had been driven up by speculation that the approval of a new silver exchange traded fund (ETF), which was launched in April, would increase investment demand and buoy prices. A year ago, silver traded around $7 an ounce.
UBS forecasts that silver will average $15 an ounce in 2007.
Silver Wheaton shares rose 39 cents to $10.47 (Canadian) in Toronto. UBS has a 12-month share price target of $12.50. Goldcorp Inc. owns a 57-per-cent interest. Silver Wheaton buys silver produced as a by-product from mines at a set contract price and sells it to smelters at the market price.
Pan American has plans to double its silver production by 2009 from 12.5 million ounces in 2005, according to UBS. The shares gained 90 cents to $19.71 and UBS has a price target of $24.75 (U.S.) on its U.S.-traded shares, which were changing hands at $17.32 on Nasdaq.
Silver Standard's mining properties are estimated to have over one billion ounces of silver resources, although it does not have any producing mines. Its shares traded today at $22.33 (Canadian) on the S&P/TSX. UBS has a $24 (U.S.) target price for the Nasdaq-traded shares, which were up 99 cents at $19.60.
Historically, silver and gold have traded at an average price ratio of 50-1, but it has recently underperformed gold, according to the report. The ratio is currently about 56-1.
“In today's market, silver, like gold, remains largely a play on investment and speculative demand rather than a pure commodity supply/demand story,” Mr. West said. However, silver is 10 per cent to 15 per cent more volatile than gold, he said.
The ETF has increased to 91.5 million ounces and if the growth continues it could result in even tighter physical markets and higher silver lease rates, according to the report.
In addition to investment demand, silver is used in photography, jewellery and industrial fabrication.
If you are an investor who likes gold, and believe that the U.S. dollar will weaken, then North American silver producers could be a good bet, said Craig West, an analyst at UBS Securities Canada.
But expect volatility, because the silver market is substantially smaller than either the gold or base metal markets and that can lead to exaggerated swings up or down, he said.
In a report to clients, Mr. West recommended Silver Wheaton Corp. (SLW), Pan American Silver Corp. (PAAS) and Silver Standard Resources Ltd. (SSRI) as “buys.” He rated Coeur d'Alene Mines Corp. (CDE-NYSE) “neutral.”
Silver traded today at $11.05 (U.S.) an ounce down from $15.20 in May after it had been driven up by speculation that the approval of a new silver exchange traded fund (ETF), which was launched in April, would increase investment demand and buoy prices. A year ago, silver traded around $7 an ounce.
UBS forecasts that silver will average $15 an ounce in 2007.
Silver Wheaton shares rose 39 cents to $10.47 (Canadian) in Toronto. UBS has a 12-month share price target of $12.50. Goldcorp Inc. owns a 57-per-cent interest. Silver Wheaton buys silver produced as a by-product from mines at a set contract price and sells it to smelters at the market price.
Pan American has plans to double its silver production by 2009 from 12.5 million ounces in 2005, according to UBS. The shares gained 90 cents to $19.71 and UBS has a price target of $24.75 (U.S.) on its U.S.-traded shares, which were changing hands at $17.32 on Nasdaq.
Silver Standard's mining properties are estimated to have over one billion ounces of silver resources, although it does not have any producing mines. Its shares traded today at $22.33 (Canadian) on the S&P/TSX. UBS has a $24 (U.S.) target price for the Nasdaq-traded shares, which were up 99 cents at $19.60.
Historically, silver and gold have traded at an average price ratio of 50-1, but it has recently underperformed gold, according to the report. The ratio is currently about 56-1.
“In today's market, silver, like gold, remains largely a play on investment and speculative demand rather than a pure commodity supply/demand story,” Mr. West said. However, silver is 10 per cent to 15 per cent more volatile than gold, he said.
The ETF has increased to 91.5 million ounces and if the growth continues it could result in even tighter physical markets and higher silver lease rates, according to the report.
In addition to investment demand, silver is used in photography, jewellery and industrial fabrication.
Gold futures edged down early Wednesday, with the dollar and the international talks on the Mideast conflict in Rome expected to drive trading. Gold for August delivery was last down $2.50 at $615.50 on the New York Mercantile Exchange. Other metals prices were mixed. Silver edged down less than a cent at $10.940 an ounce and palladium dropped $3 at $314 an ounce. Platinum rose $3.50 at $1,233 an ounce. Copper was last down 7.60 cents at $3.385 a pound
Tuesday, July 25, 2006
Comex gold futures remained range bound during choppy trade on Tuesday at the New York Mercantile Exchange and settled higher after recovering from a drop off in price initiated by a rally in the dollar.
At settlement, most active August gold is up $4.80 at $618 an ounce. During the session the contract was steady in range bound trade but a rally in the dollar sent the contract to a $610 an ounce session low.
The dollar rallied on the heels of better-than-expected U.S. economic data as June existing home sales and July consumer confidence came in above market expectations.
At settlement, most active August gold is up $4.80 at $618 an ounce. During the session the contract was steady in range bound trade but a rally in the dollar sent the contract to a $610 an ounce session low.
The dollar rallied on the heels of better-than-expected U.S. economic data as June existing home sales and July consumer confidence came in above market expectations.
Gold futures recovered to trade higher on Tuesday, as energy prices rose and the Mideast trip of U.S. Secretary of State Condoleezza Rice appeared unlikely to bring about an immediate cease-fire between Israel and Lebanon, where heavy fighting continued overnight. Gold for August delivery was last trading up $8.30 at $621.50 an ounce on the New York Mercantile Exchange. "Oil's firm close and ongoing violence in the Middle East has sparked buying interest overnight," said James Moore of TheBullionDesk.com. Other metals prices were also firmer. Silver added 12 cents at $11.040 an ounce, copper edged up 5.80 cents at $3.44 a pound and platinum rose $26.70 at $1,236 an ounce. Palladium edged down 5 cents at $316 an ounce.
Bema Gold Corp. says its Cerro Casale joint venture project in Chile will cost nearly $2 billion US to develop but is estimated to contain 16.9 million ounces of gold, five billion pounds of copper and 28.5 million ounces of silver.
The Vancouver company said Monday the project it is trying to develop with Arizona Star Resource Corp. requires an initial capital investment of $1.96 billion US and would have a project life of 17 years with a payback period of 4.9 years.
The Vancouver company said it continues to seek major mine development partners for the South American project, which Bema says could produce about 990,000 ounces of gold a year and 294 million pounds of copper.
Bema said the latest appraisal conducted by Mine Quarry Engineering Services Inc. analyzed and modified ore processing concepts and updated the operating and capital costs of a 2000 feasibility study completed by Placer Dome Inc. and updated by Placer in 2004.
Placer eventually decided not to develop the project.
Last month, Arizona Star and Bema completed deals with Placer's new owner, Barrick Gold Corp. to buy its 51 percent interest in the Chilean deposit.
Under the deal, Arizona Star and Bema will jointly pay Barrick $10 million US after any decision to build a mine at Cerro Casale.
Barrick's stake in Compania Minera Casale was formerly held by Placer Dome Inc., which Toronto-based Barrick acquired earlier this year in a multibillion-dollar deal that created the world's biggest gold miner.
Cerro Casale, discovered by Arizona Star and Bema in 1996, is a large undeveloped gold and copper deposit.
In Monday afternoon trading on the New York Stock Exchange, Bema shares rose 6 cents to $5.08, while Arizona Star stock fell 9 cents, to $11.12, on the Nasdaq.
The Vancouver company said Monday the project it is trying to develop with Arizona Star Resource Corp. requires an initial capital investment of $1.96 billion US and would have a project life of 17 years with a payback period of 4.9 years.
The Vancouver company said it continues to seek major mine development partners for the South American project, which Bema says could produce about 990,000 ounces of gold a year and 294 million pounds of copper.
Bema said the latest appraisal conducted by Mine Quarry Engineering Services Inc. analyzed and modified ore processing concepts and updated the operating and capital costs of a 2000 feasibility study completed by Placer Dome Inc. and updated by Placer in 2004.
Placer eventually decided not to develop the project.
Last month, Arizona Star and Bema completed deals with Placer's new owner, Barrick Gold Corp. to buy its 51 percent interest in the Chilean deposit.
Under the deal, Arizona Star and Bema will jointly pay Barrick $10 million US after any decision to build a mine at Cerro Casale.
Barrick's stake in Compania Minera Casale was formerly held by Placer Dome Inc., which Toronto-based Barrick acquired earlier this year in a multibillion-dollar deal that created the world's biggest gold miner.
Cerro Casale, discovered by Arizona Star and Bema in 1996, is a large undeveloped gold and copper deposit.
In Monday afternoon trading on the New York Stock Exchange, Bema shares rose 6 cents to $5.08, while Arizona Star stock fell 9 cents, to $11.12, on the Nasdaq.
Monday, July 24, 2006
- Barrick Gold Corp. plans to offer $1.29-billion for NovaGold Resources Inc. as Barrick, the world's largest gold producer, seeks to consolidate its interest in projects in Alaska and British Columbia.
Toronto-based Barrick said it plans to offer $14.50 in cash for each NovaGold share, a 24-percent premium over Friday's closing price on the AMEX.
Barrick said the acquisition would boost its pro forma measured and indicated gold resources in North America by 54 percent to 34.7 million ounces, while inferred gold resources would rise by 89 percent to 28.2 million ounces.
It said the deal, which would allow it to consolidate its interest in the Donlin Creek project in Alaska, and acquire 100 percent of the Galore Creek project in British Columbia, would be worth $1.53 billion on a fully diluted basis.
Barrick also said it has agreed to buy Pioneer Metals Corp. for C$60.1 million.
Under that offer, each Pioneer shareholder will receive C$1 per share in cash, representing a 54-percent premium over last Friday's closing price of Pioneer's shares on the TSX.
Toronto-based Barrick said it plans to offer $14.50 in cash for each NovaGold share, a 24-percent premium over Friday's closing price on the AMEX.
Barrick said the acquisition would boost its pro forma measured and indicated gold resources in North America by 54 percent to 34.7 million ounces, while inferred gold resources would rise by 89 percent to 28.2 million ounces.
It said the deal, which would allow it to consolidate its interest in the Donlin Creek project in Alaska, and acquire 100 percent of the Galore Creek project in British Columbia, would be worth $1.53 billion on a fully diluted basis.
Barrick also said it has agreed to buy Pioneer Metals Corp. for C$60.1 million.
Under that offer, each Pioneer shareholder will receive C$1 per share in cash, representing a 54-percent premium over last Friday's closing price of Pioneer's shares on the TSX.
Gold fell 2.7 percent to a three-week low on Monday as a rise in the dollar and easing oil prices prompted some investors to sell their positions.
But the decline was expected to attract physical buyers and bargain hunters, who could support the market, dealers said.
“There is a bit of dollar strength which is kicking it lower. The sentiment is: Sell it now and buy the dips,” said a precious metals trader in London.
“I think it will bounce, but they are going to try to push it lower before it goes up again.”
Gold XAU fell as low as $603.10 an ounce, its lowest since June 30, and was quoted at $604.00/604.75 by 1438 GMT, against $619.50/621.00 in New York on Friday when it dropped nearly 2 percent.
The dollar gained broadly, thanks to a smattering of overnight buying against the euro, which failed to break through some key technical levels.
“Overall, we expect trading to remain nervous and volatile as markets lack a clear sense of direction,” Barclays Capital said.
Spot gold climbed to a two-month high last Monday on safe-haven buying as fighting between Israel and Hezbollah guerrillas in Lebanon escalated.
“The market seems to be downgrading the political risk associated with events in the Middle East. Oil prices are failing to react to further fighting in Lebanon, and this is removing a reason for gold to rally,” James Steel, analyst at HSBC Bank, said in a daily note.
US Secretary of State Condoleezza Rice flew unannounced to Beirut on Monday to seek a “sustainable” ceasefire in Lebanon, where Hezbollah guerrillas were battling an Israeli tank incursion in the south.
Oil slipped below $74 a barrel due to diplomatic efforts to resolve the conflict in the Middle East, a region that pumps almost a third of the world’s oil.
“The market could not break out on the upside level. I think that has sent bearish signals to the market,” said a dealer in Hong Kong, referring to the heavy selling after gold touched around $636 an ounce last Friday.
Physical buying picked up in India, the world’s largest gold consumer, ahead of the busy festival season that starts in a couple of weeks.
In other precious metals, spot platinum XPT fell to $1,184.50/1,192.50 an ounce from $1,206/1,212 late in New York, while palladium XPD was up $1 at $302/307. Silver XAG fell to $10.69/10.79 an ounce from $10.78/10.88.
But the decline was expected to attract physical buyers and bargain hunters, who could support the market, dealers said.
“There is a bit of dollar strength which is kicking it lower. The sentiment is: Sell it now and buy the dips,” said a precious metals trader in London.
“I think it will bounce, but they are going to try to push it lower before it goes up again.”
Gold XAU fell as low as $603.10 an ounce, its lowest since June 30, and was quoted at $604.00/604.75 by 1438 GMT, against $619.50/621.00 in New York on Friday when it dropped nearly 2 percent.
The dollar gained broadly, thanks to a smattering of overnight buying against the euro, which failed to break through some key technical levels.
“Overall, we expect trading to remain nervous and volatile as markets lack a clear sense of direction,” Barclays Capital said.
Spot gold climbed to a two-month high last Monday on safe-haven buying as fighting between Israel and Hezbollah guerrillas in Lebanon escalated.
“The market seems to be downgrading the political risk associated with events in the Middle East. Oil prices are failing to react to further fighting in Lebanon, and this is removing a reason for gold to rally,” James Steel, analyst at HSBC Bank, said in a daily note.
US Secretary of State Condoleezza Rice flew unannounced to Beirut on Monday to seek a “sustainable” ceasefire in Lebanon, where Hezbollah guerrillas were battling an Israeli tank incursion in the south.
Oil slipped below $74 a barrel due to diplomatic efforts to resolve the conflict in the Middle East, a region that pumps almost a third of the world’s oil.
“The market could not break out on the upside level. I think that has sent bearish signals to the market,” said a dealer in Hong Kong, referring to the heavy selling after gold touched around $636 an ounce last Friday.
Physical buying picked up in India, the world’s largest gold consumer, ahead of the busy festival season that starts in a couple of weeks.
In other precious metals, spot platinum XPT fell to $1,184.50/1,192.50 an ounce from $1,206/1,212 late in New York, while palladium XPD was up $1 at $302/307. Silver XAG fell to $10.69/10.79 an ounce from $10.78/10.88.
Sunday, July 23, 2006
A rally in gold prices has sparked a new gold rush in South Africa as mining firms seek to exploit reserves buried deeper than humans have ever dug before.
Rocketing prices have transformed the ageing gold industry in the world's largest producer, with companies spending hundreds of millions of dollars on expansion projects.
South Africa already has the deepest gold mines in the world, some extending 3,500 metres (2.2 miles) below the surface to sweltering tunnels threatened by tremors.
That distance is seven times greater than the height of world's tallest building, Taipei 101 in Taiwan, but gold producers want to burrow still deeper.
"We estimate that between 3,500 metres below surface and 5,000 metres, there's probably as much gold as we've mined so far," said Dick Kruger, of industry group the Chamber of Mines.
Remaining gold deposits in South Africa are estimated to make up around 40 percent of the world total and are three times larger than those of the United States and Australia combined.
Big producers AngloGold Ashanti and Gold Fields are making plans to dig deeper at existing mines in projects that would cost 6.1 billion rand (470 million pounds) and could exploit 14 million more ounces of gold.
"The projects that we're dusting off now with these higher gold prices are projects that are going to go from 3.5 kilometres to just above 4 kilometres," said David Diering, an executive with the world's third largest gold producer AngloGold.
INDUSTRY TURNAROUND
It's a turnaround for an industry many were writing off little more than a year ago.
South Africa has produced around 1.5 billion ounces of gold -- just over a third of all mined gold in the world -- but much of it came from seams near the surface, now largely exhausted.
South Africa's annual bullion output has tumbled by 50 percent over the past decade as high-grade mines ran out of ore and firms grappled with more difficult underground operations.
In recent years, a resilient rand also slashed export earnings and forced the closure of some loss-making mines.
A bull market in gold changed all that.
Fears of inflation and concerns over global stability have propelled gold higher, with prices hitting a 26-year peak of $730 an ounce in mid-May.
Even after a recent retreat to around $630 an ounce, a softer rand has sweetened the price for producers.
"There are no technological challenges to go to 4 or 4.5 kilometres. The impediments to going down to these depths were economic," said Diering, AngloGold's executive officer for business planning in Africa.
NEW MINES TOO RISKY
So far, companies are focusing on expanding existing mines, rather than building more risky ultra-deep mines.
"The tendency is not to sink a new shaft and equip it with all new technology but rather to extend current workings," said Ray Durrheim, a senior researcher at the Council for Scientific and Industrial Research.
"It's a far lower-risk option because you're not having to put $1 billion into a new shaft and wait five years before you get your first ounce of gold out," said Durrheim.
As mine shafts sink deeper, temperatures soar and at 4,000 metres reach 62 degrees centigrade (144 degrees Fahrenheit). Firms must spend huge amounts on refrigeration and ventilation to cool mines down to around 28 degrees.
Despite these challenges, investors are enthusiastic: they recently poured money into a new company looking at deep mines, drawing a warning about the uncertain prospects.
Wits Gold, which listed on the Johannesburg bourse in April, has prospecting rights over ground that holds 159 million ounces of gold, much of it below 2,500 metres.
The shares have soared fourfold since a private placement, prompting management to temper shareholders' expectations.
"We're happy to see a debate about the potential for mining in areas and at levels that were previously considered uneconomic," Chief Executive Marc Watchorn said. "However, our strategy is to concentrate initially on resources at shallower depths."
Even if new mines remain years away, the renewed activity has caused people to look again at the Deepmine research project -- abandoned in 2002 due to low prices.
During the project, scientists examined prospects for digging mines as deep as 5,000 metres using traditional mining methods and studied ideas for radical new mine technology.
Durrheim, who was programme manager for Deepmine, said they examined using robots and automated processing machines to drill and crush rocks. Baskets of ore might be magnetically levitated to the surface, eliminating the need for old-fashioned lifts.
Prices would probably have to rise much further for firms to look at building deep mines from scratch or to allow researchers to dust off the preliminary research into futuristic mines.
"The prices would have to stay at a higher level for quite a period of time before companies would feel comfortable to invest in those kind of projects," said Alex Conradie, mineral economics analyst in the Department of Minerals and Energy.
"But it's definitely a possibility for the future because the deposits are there and there's technology in place."
Rocketing prices have transformed the ageing gold industry in the world's largest producer, with companies spending hundreds of millions of dollars on expansion projects.
South Africa already has the deepest gold mines in the world, some extending 3,500 metres (2.2 miles) below the surface to sweltering tunnels threatened by tremors.
That distance is seven times greater than the height of world's tallest building, Taipei 101 in Taiwan, but gold producers want to burrow still deeper.
"We estimate that between 3,500 metres below surface and 5,000 metres, there's probably as much gold as we've mined so far," said Dick Kruger, of industry group the Chamber of Mines.
Remaining gold deposits in South Africa are estimated to make up around 40 percent of the world total and are three times larger than those of the United States and Australia combined.
Big producers AngloGold Ashanti and Gold Fields are making plans to dig deeper at existing mines in projects that would cost 6.1 billion rand (470 million pounds) and could exploit 14 million more ounces of gold.
"The projects that we're dusting off now with these higher gold prices are projects that are going to go from 3.5 kilometres to just above 4 kilometres," said David Diering, an executive with the world's third largest gold producer AngloGold.
INDUSTRY TURNAROUND
It's a turnaround for an industry many were writing off little more than a year ago.
South Africa has produced around 1.5 billion ounces of gold -- just over a third of all mined gold in the world -- but much of it came from seams near the surface, now largely exhausted.
South Africa's annual bullion output has tumbled by 50 percent over the past decade as high-grade mines ran out of ore and firms grappled with more difficult underground operations.
In recent years, a resilient rand also slashed export earnings and forced the closure of some loss-making mines.
A bull market in gold changed all that.
Fears of inflation and concerns over global stability have propelled gold higher, with prices hitting a 26-year peak of $730 an ounce in mid-May.
Even after a recent retreat to around $630 an ounce, a softer rand has sweetened the price for producers.
"There are no technological challenges to go to 4 or 4.5 kilometres. The impediments to going down to these depths were economic," said Diering, AngloGold's executive officer for business planning in Africa.
NEW MINES TOO RISKY
So far, companies are focusing on expanding existing mines, rather than building more risky ultra-deep mines.
"The tendency is not to sink a new shaft and equip it with all new technology but rather to extend current workings," said Ray Durrheim, a senior researcher at the Council for Scientific and Industrial Research.
"It's a far lower-risk option because you're not having to put $1 billion into a new shaft and wait five years before you get your first ounce of gold out," said Durrheim.
As mine shafts sink deeper, temperatures soar and at 4,000 metres reach 62 degrees centigrade (144 degrees Fahrenheit). Firms must spend huge amounts on refrigeration and ventilation to cool mines down to around 28 degrees.
Despite these challenges, investors are enthusiastic: they recently poured money into a new company looking at deep mines, drawing a warning about the uncertain prospects.
Wits Gold, which listed on the Johannesburg bourse in April, has prospecting rights over ground that holds 159 million ounces of gold, much of it below 2,500 metres.
The shares have soared fourfold since a private placement, prompting management to temper shareholders' expectations.
"We're happy to see a debate about the potential for mining in areas and at levels that were previously considered uneconomic," Chief Executive Marc Watchorn said. "However, our strategy is to concentrate initially on resources at shallower depths."
Even if new mines remain years away, the renewed activity has caused people to look again at the Deepmine research project -- abandoned in 2002 due to low prices.
During the project, scientists examined prospects for digging mines as deep as 5,000 metres using traditional mining methods and studied ideas for radical new mine technology.
Durrheim, who was programme manager for Deepmine, said they examined using robots and automated processing machines to drill and crush rocks. Baskets of ore might be magnetically levitated to the surface, eliminating the need for old-fashioned lifts.
Prices would probably have to rise much further for firms to look at building deep mines from scratch or to allow researchers to dust off the preliminary research into futuristic mines.
"The prices would have to stay at a higher level for quite a period of time before companies would feel comfortable to invest in those kind of projects," said Alex Conradie, mineral economics analyst in the Department of Minerals and Energy.
"But it's definitely a possibility for the future because the deposits are there and there's technology in place."
Friday, July 21, 2006
World No. 2 gold miner Newmont's output will be slightly down in 2006 and 2007 before it begins to rise in 2008, Chief Executive Wayne Murdy said, adding that he expected gold prices to remain strong for years.
"Generally, our production is down slightly this year from last year. It will be slightly down to flat next year and then we start to get into growth production mode," Murdy told Reuters from his Denver, Colorado, headquarters on Thursday.
Output at some Newmont mines was slipping due to depletion of reserves, and the firm was waiting for new mines to open, Murdy said in a telephone interview with Reuters in Ghana, where the company poured its first gold at a new mine this week.
In February, Newmont forecast consolidated 2006 gold sales of 7.98 million ounces at a cash cost of $283 an ounce, down from 8.6 million ounces in 2005 at a cost of $236 per ounce.
Murdy said he expected global production to remain flat or fall, helping support gold prices which hit a 26-year high of $730 a troy ounce on May 12.
"We feel there are a lot of reasons why the gold price has moved so positively ... it has to do with factors such as the growth in investment demand, growth in traditional demand. As a total industry, production is going to be flat to down globally," he said.
"We feel the factors that support the gold price continue to be in place, we expect the gold price to continue to be strong for a number of years," he added.
Spot gold was $635.20/90 per ounce at 1330 GMT on Friday, up more than $3 from Thursday's New York close.
But Murdy said consumers were not put off by high prices.
"Demand numbers continue to be very strong. People like to buy things which are going up in price. The jewellery side last year was up globally by 4 percent," he said.
LOOKING FOR ACQUISITIONS
Newmont lost its place as the world's top gold producer when Canada's Barrick Gold Corporation took over rival Placer Dome this year, taking the new group's projected 2006 output to 8.6-8.9 million ounces.
Newmont's reserves are at a record 95 million ounces but it hopes to increase that, maybe through acquisitions, Murdy said.
"We continue to have good exploration results, we think we can continue to grow our reserve base," he said. "We are always looking at acquisition opportunities ... It is an important part of our strategy."
A key plank in expanding Newmont's resources has been its investments in Ghana where it has some 18 million ounces of reserves, or nearly 20 percent of its total. Newmont poured the first gold this week at its 500,000 ounce-a-year Ahafo mine.
The mine benefited from a $125 million loan from the World Bank's International Finance Corporation (IFC), despite dissent within the IFC's board over its environmental impact.
"If you look at development in any country, there is always trade offs. A lot of the time there will be displacement, that is the judgement the government has to make. For people to say the costs are greater than the benefits, I would question their motives," Murdy said.
Newmont was actively exploring elsewhere in Ghana, Africa's second biggest gold producer after world No.1 South Africa, and favoured expansion there rather than elsewhere on the continent, he added.
"Generally, our production is down slightly this year from last year. It will be slightly down to flat next year and then we start to get into growth production mode," Murdy told Reuters from his Denver, Colorado, headquarters on Thursday.
Output at some Newmont mines was slipping due to depletion of reserves, and the firm was waiting for new mines to open, Murdy said in a telephone interview with Reuters in Ghana, where the company poured its first gold at a new mine this week.
In February, Newmont forecast consolidated 2006 gold sales of 7.98 million ounces at a cash cost of $283 an ounce, down from 8.6 million ounces in 2005 at a cost of $236 per ounce.
Murdy said he expected global production to remain flat or fall, helping support gold prices which hit a 26-year high of $730 a troy ounce on May 12.
"We feel there are a lot of reasons why the gold price has moved so positively ... it has to do with factors such as the growth in investment demand, growth in traditional demand. As a total industry, production is going to be flat to down globally," he said.
"We feel the factors that support the gold price continue to be in place, we expect the gold price to continue to be strong for a number of years," he added.
Spot gold was $635.20/90 per ounce at 1330 GMT on Friday, up more than $3 from Thursday's New York close.
But Murdy said consumers were not put off by high prices.
"Demand numbers continue to be very strong. People like to buy things which are going up in price. The jewellery side last year was up globally by 4 percent," he said.
LOOKING FOR ACQUISITIONS
Newmont lost its place as the world's top gold producer when Canada's Barrick Gold Corporation took over rival Placer Dome this year, taking the new group's projected 2006 output to 8.6-8.9 million ounces.
Newmont's reserves are at a record 95 million ounces but it hopes to increase that, maybe through acquisitions, Murdy said.
"We continue to have good exploration results, we think we can continue to grow our reserve base," he said. "We are always looking at acquisition opportunities ... It is an important part of our strategy."
A key plank in expanding Newmont's resources has been its investments in Ghana where it has some 18 million ounces of reserves, or nearly 20 percent of its total. Newmont poured the first gold this week at its 500,000 ounce-a-year Ahafo mine.
The mine benefited from a $125 million loan from the World Bank's International Finance Corporation (IFC), despite dissent within the IFC's board over its environmental impact.
"If you look at development in any country, there is always trade offs. A lot of the time there will be displacement, that is the judgement the government has to make. For people to say the costs are greater than the benefits, I would question their motives," Murdy said.
Newmont was actively exploring elsewhere in Ghana, Africa's second biggest gold producer after world No.1 South Africa, and favoured expansion there rather than elsewhere on the continent, he added.
Gold shrugged off a weaker
U.S. dollar to fall nearly 2 percent on Friday, on a sustained
sell-off from the metal's recent rises.Early physical buying helped gold touch an intraday high of
$630.80 an ounce, but profit-taking erased much of the gains
and dragged down the price to as low as $620.30.By 0524 GMT, spot gold was quoted at $624.50/625.25
an ounce, down sharply from $632.00/633.00 late in New York on
Thursday, but remained above a two-week low of $617.95 an ounce
hit on Wednesday."People think there will be a similar trading pattern,
that's why we saw some covering. I mean, the recent low was
about $620 and then we saw the market bouncing back," said a
dealer in Singapore.Some dealers expected gold to trade in a choppy
$615-to-$665-an-ounce range in the next few weeks, with heavy
technical selling expected to emerge if the metal breached the
key support level."It's definitely a continuation of what we saw yesterday.
The market is of the opinion that maybe the inflationary fears
are overcooked," said Darren Heathcote, head of trading at
Investec Australia in Sydney."The geopolitical tension will still be there... but at the
moment, some people have been happy to take profits. I think
we've seen a reasonable amount of profit-taking in the last
couple of days," he said.Worsening conflict between Israel and Hizbollah guerrillas
propelled gold to a two-month high of $676 on Monday. Gold
dropped sharply two days later before comments on inflation
from Federal Reserve Chairman Ben Bernanke helped it rebound.Expectations the Fed may be near the end of its two-year
tightening campaign started to grow after Bernanke said in two
days of testimony before Congress that inflation would likely
ease in coming quarters as the U.S. economy slows.Minutes from the Fed's last policy meeting showed that Fed
officials were undecided about another interest rate hike in
August and wanted to see more economic data before deciding
whether more credit tightening was needed.The euro was slightly higher at $1.2644. A weaker
dollar normally makes dollar-priced gold more attractive to buy
for holders of other currencies."I would say the immediate (trading) range will probably be
somewhere around $615 to $665... that I see a $50-range as a
possibility in the days, weeks ahead," said Heathcote.Tensions in the Middle East could prevent gold from
breaching $615, said Heathcote."I personally feel it probably won't at the moment. There's
too much risk on the upside ... not enough to really give me
comfort to think that it's going to fall back to those levels
in the present moment," he said.Gold, used in jewellery and investment, has lost around 15
percent in value since rallying to its highest in 26 years at
$730 an ounce in mid-May.Benchmark gold futures on the Tokyo Commodity
Exchange dropped by the daily 60-yen limit to 2,353 yen per
gram as weak technicals and falls in dollar-based prices
ignited active selling by Japanese investors."The market is trying to find a support level after a
volatile week," said Shuji Sugata, assistant manager at
Mitsubishi Corp Futures and Securities Ltd."The market sees 2,300 yen as the next key support level,
but falls below the level could be limited because of
geopolitical concerns," Sugata said.In other precious metals, platinum fell to
$1,210/1,205 an ounce from $1,222/1,228 late in New York.
Sister metal palladium also dropped to $306/311 an ounce
from $309/314.Silver inched down to $10.87/10.97 an ounce from
$10.98/11.08 late in New York.Precious Metals Prices by 0526 GMT*
Metal Last Net change Pct Move Gold
625.25 -3.95 -0.63
Platinum 1211.00 -11.00 -0.90
Palladium 306.00 -3.00 -0.97
Silver 10.87 -0.02 -0.18
Change so far in 2006
Metal Latest bid End prev year Pct Move
Gold 625.25 517.20 +20.89
Platinum 1211.00 968.00 +25.10
Palladium 306.00 254.00 +20.47
Silver 10.87 8.81 +23.38
Thursday, July 20, 2006
Gold fell on Thursday, heading for its first weekly decline in more than a month, on speculation that the risks of accelerating inflation and the spread of violence in the Middle East may be exaggerated.
Gold had rallied 24 percent from a two-month low June 14 as oil surged to a record and Israel attacked Lebanon, targeting the terrorist group Hezbollah. Investors were concerned violence would spread in the Middle East, home to the world's largest oil exporters. So far, the conflict has been contained.
``A lot of people have got carried away on these political tensions,'' said Bernard Sin, chief trader at Geneva-based MKS Finance, one of Switzerland's four gold refiners. ``The market is really, really confused right now. It's very volatile and investors are reluctant to hold big positions.''
Gold futures for August delivery fell $10.30, or 1.6 percent, to $632.50 an ounce on the Comex division of the New York Mercantile Exchange. Prices are down 5.3 percent since July 14, which would be the first such decline in five weeks and the biggest since the week ended May 19.
Gold for immediate delivery fell $10.45, or 1.6 percent, to $632.30 an ounce at 7:10 p.m. in London. It has risen 49 percent in the past year.
``Most of the bad news from the Middle East is reflected in the price already,'' said Ross Norman, a director of TheBullionDesk.com. ``Gold has bounced back quite a lot since last month. It's had a good run.''
Volatile Markets
The gold market ``is seeing high degrees of volatility,'' Norman said. ``All the commodities are yo-yoing. It's reflecting continued uncertainty on where interest rates in the U.S. are going, as well as oil prices and the dollar.''
The dollar dropped for a second day against the euro on speculation minutes of the Federal Reserve's latest meeting will reinforce expectations that policy makers are almost done raising borrowing costs.
Ending the policy of raising borrowing costs may dull the appeal of U.S. assets compared with those of Europe and Japan, where central banks are lifting rates. The dollar yesterday fell the most in three weeks against the euro and dropped versus the yen after Fed Chairman Ben S. Bernanke, in testimony to Congress, signaled the Fed was wary of pushing rates too high.
Among other precious for immediate delivery in London, silver fell 10.5 cents, or 0.9 percent, to $11.035 an ounce, palladium fell $6, or 1.9 percent, to $307 an ounce, and platinum slid $8.25, or 0.7 percent, to $1,215.50 ounce.
South Africa's three major gold mining companies are expected to report an improved June quarter when compared with the March quarter due to the higher gold price, according to gold analysts.
"The South African gold mines are likely to have had a good quarter after production was lower in the March quarter, due to seasonal factors and the holiday break. The rand price was also substantially higher during the June quarter," an analyst said.
"I'm not expecting a particularly good operating quarter. The improvement in financial results will be driven by the gold price," a second analyst said.
Earnings surge?
"All the heavy lifting during the June quarter was done by the gold price. If the gold companies play ball in the September quarter and the gold price remains at current levels then earnings could improve by another 40 percent to 50 percent in the September quarter," Johannesburg-based analyst for Investec Leon Esterhuizen said.
The rand gold price was R144 139 rand per kilogramme, from Wednesday's close of R146 881 rand, and after climbing to a record high above R155 000 rand per kilogramme earlier in the week.
"The June quarter will be a very disappointing operational quarter. The gold mining companies need to be generating a cash operating margin of at least 30 percent and they have to improve their cost control and stop mining low grade ore," Esterhuizen added.
During the June quarter, the average closing rand gold price was R130 295 per kilogramme, up 19.5 percent from the March quarter's average closing rand gold price of R109 053 per kilogramme.
In the three months ended June, the average closing price for US dollar gold was $628.37 a troy ounce, up 13 percent from the average closing price of $554.63/oz.
AngloGold Ashanti will report its June quarter result on July 27, Gold Fields will issue its results on August 3 and Harmony Gold on August 7.
Wednesday, July 19, 2006
Australian miner Oxiana Ltd says gold production at its flagship Sepon project in Laos is expected to increase in the second half of the year, and has stuck to its annual gold and copper production forecasts.
Melbourne-based Oxiana reported group gold production of 47,674 ounces of gold, 498,499 ounces of silver, 17,395 tonnes copper and 31,300 tonnes zinc in the second quarter.
Oxiana said gold production at Sepon was impacted by lower grades but was expected to increase in the second half.
For the quarter Oxiana produced 39,274 ounces of gold at Sepon and 79,895 ounces for the first half.
"Gold production is expected to increase in the second half of the year with grades higher in the third quarter and throughput increasing at the end of the wet season in the fourth quarter," the company said.
Oxiana said forecast gold production for the year at Sepon remained at 170,000 ounces.
In the second quarter, the Sepon copper plant produced marginally above nameplate capacity of 60,000 tonnes per annum.
It produced 15,995 tonnes of copper for the quarter and 30,051 tonnes for the half.
The production forecast for the year remained at 60,000 tonnes.
Gold for August delivery ended up $13.30 at $642.80 an ounce on the New York Mercantile Exchange, moving back up from an overnight low of $618.90.
"Gold bullion and equities took off at drag-race speeds, immediately after Mr. Bernanke confirmed that he sees plenty of signs of a slowing U.S. economy," said Jon Nadler, analyst at Kitco.com. "Once again, gold can refocus on the geopolitical drivers that have lent it support in past weeks."
Other metals prices also posted gains. Silver added 60 cents at $11.125 an ounce. Copper edged up 1.9 cents at $3.5935 a pound, platinum rose $2.90 at $1,237.50 an ounce and palladium added $3.80 at $318.0 an ounce.
The dollar fell against major currencies after Bernanke told Congress that the economy is likely to slow, easing inflation pressures. His comments came just ninety minutes after a consumer inflation report that showed core prices rising at a faster-than-expected pace.
"The dollar had a very big reversal today," said Charles Nedoss, senior account manager at Peak Trading Group in Chicago. "The market followed some of Bernanke's statements. Gold was trading dollar weakness today."
Trading in metals has been very volatile lately with big price swings in both directions. Prices lost almost $40 in the last two sessions after gaining more than 5% last week as safe-haven demand was fueled by fighting in the Middle East, deadly train bombings in India and defiance by Iran and North Korea over their nuclear programs.
Gold has also been hurt by a shift into the dollar as a safe-haven play. The dollar had found strength in recent weeks from expectations that the Fed will keep raising rates, increasing the attractiveness of the currency and assets denominated in it.
Gold may now regain some of its safe-haven allure. Overnight, fighting between Israel and Lebanon continued. Since the conflict broke out last week, at least 270 Lebanese citizens and 25 Israelis have died, according to the BBC. An Israeli general said Tuesday that Israel's offensive would continue for another few weeks, and that the deployment of large numbers of ground forces had not been ruled out.
Dale Doelling, chief market technician at Trends In Commodities, said that gold will likely rise further in the next few days.
"The longer-term outlook isn't as clearly defined and it will take consecutive closes above the recent high at $677.50 to get the momentum players back into the market," Doelling said.
On the supply side, gold inventories were unchanged at 8.06 million troy ounces, according to Nymex data. Silver supplies rose by 996 troy ounces to 102.7 million and copper supplies fell by 42 short tons to 7,144 short tons.
"Gold bullion and equities took off at drag-race speeds, immediately after Mr. Bernanke confirmed that he sees plenty of signs of a slowing U.S. economy," said Jon Nadler, analyst at Kitco.com. "Once again, gold can refocus on the geopolitical drivers that have lent it support in past weeks."
Other metals prices also posted gains. Silver added 60 cents at $11.125 an ounce. Copper edged up 1.9 cents at $3.5935 a pound, platinum rose $2.90 at $1,237.50 an ounce and palladium added $3.80 at $318.0 an ounce.
The dollar fell against major currencies after Bernanke told Congress that the economy is likely to slow, easing inflation pressures. His comments came just ninety minutes after a consumer inflation report that showed core prices rising at a faster-than-expected pace.
"The dollar had a very big reversal today," said Charles Nedoss, senior account manager at Peak Trading Group in Chicago. "The market followed some of Bernanke's statements. Gold was trading dollar weakness today."
Trading in metals has been very volatile lately with big price swings in both directions. Prices lost almost $40 in the last two sessions after gaining more than 5% last week as safe-haven demand was fueled by fighting in the Middle East, deadly train bombings in India and defiance by Iran and North Korea over their nuclear programs.
Gold has also been hurt by a shift into the dollar as a safe-haven play. The dollar had found strength in recent weeks from expectations that the Fed will keep raising rates, increasing the attractiveness of the currency and assets denominated in it.
Gold may now regain some of its safe-haven allure. Overnight, fighting between Israel and Lebanon continued. Since the conflict broke out last week, at least 270 Lebanese citizens and 25 Israelis have died, according to the BBC. An Israeli general said Tuesday that Israel's offensive would continue for another few weeks, and that the deployment of large numbers of ground forces had not been ruled out.
Dale Doelling, chief market technician at Trends In Commodities, said that gold will likely rise further in the next few days.
"The longer-term outlook isn't as clearly defined and it will take consecutive closes above the recent high at $677.50 to get the momentum players back into the market," Doelling said.
On the supply side, gold inventories were unchanged at 8.06 million troy ounces, according to Nymex data. Silver supplies rose by 996 troy ounces to 102.7 million and copper supplies fell by 42 short tons to 7,144 short tons.
The gold price fell to a two-week low of $617.30 a troy ounce on the US interest rate outlook, before recovering to above $642/oz, said traders.
In afternoon trade, gold was quoted at $642.35/oz, up $12.15/oz from the previous close. The euro was last bid at $1,2469, down $0,036 from late trade yesterday.
US June consumer price inflation rose 0,3%, which was above the expected 0,2%, and along with US producer inflation yesterday that gave more impetus for US interest rates, which was positive for the US dollar, and bad for the gold price, said Johannesburg-based Absa trader Johan Maree.
US consumer prices rose 0,2% in June slightly above the 0,2% increase expected on Wall Street, said AFX.
The market appeared to be more used to the Middle East situation and that had caused a big sell off in gold, said Maree.
On the one side there was the Middle East and on the other the outlook for US interest rates, he said.
The underlying long-term outlook for gold was bullish and the aggressive pull back from the long-term high of $730/oz in May was just a correction, which had found support at $535/oz in June, London-based JP Morgan technical analysts wrote.
"Attention focuses back to whether the Fed will keep hiking interest rates towards 6% for Fed funds. Our economics team continued to see the Fed only raising rates one more time at next month’s Federal Open Market Committee meeting to 5.5%," London-based UBS analysts wrote.
"Overall, we expect gold prices to remain highly volatile in the short term as the co-existence of both bullish and bearish factors in the market at present, is likely to leave scope for swift changes in sentiment," Absa/Barclays analysts wrote.
"Concerns over the Lebanon-Israeli dispute should favour gold as a safe haven asset, as opposed to a strengthening dollar - and increased expectations over further Fed tightening which instead, are likely to prove bearish for gold in the short term," said Absa/Barclays.
Important developments might come from testimony on the US economy by US Federal Reserve chairman Ben Bernanke this afternoon, said the bank.
"The view that US rates will continue to increase has dampened gold’s spirits although the tensions in the Middle East will generate some safe-haven support. For now support should be found back at $618/oz and $610/oz, the bottom of the current channel," UK-based TheBullionDesk.com analyst James Moore wrote.
Platinum was last quoted at $1,210/oz, down $8/oz from yesterday’s close, while palladium was last quoted at $305,50/oz, $2/oz lower than the previous close.
Both platinum and palladium failed to hold their respective support levels at $1,200/oz and $305/oz respectively on the Tokyo Commodity Exchange, Moore wrote.
Next support would be below $1,185/oz for platinum and $285/oz for palladium, he said.
In afternoon trade, gold was quoted at $642.35/oz, up $12.15/oz from the previous close. The euro was last bid at $1,2469, down $0,036 from late trade yesterday.
US June consumer price inflation rose 0,3%, which was above the expected 0,2%, and along with US producer inflation yesterday that gave more impetus for US interest rates, which was positive for the US dollar, and bad for the gold price, said Johannesburg-based Absa trader Johan Maree.
US consumer prices rose 0,2% in June slightly above the 0,2% increase expected on Wall Street, said AFX.
The market appeared to be more used to the Middle East situation and that had caused a big sell off in gold, said Maree.
On the one side there was the Middle East and on the other the outlook for US interest rates, he said.
The underlying long-term outlook for gold was bullish and the aggressive pull back from the long-term high of $730/oz in May was just a correction, which had found support at $535/oz in June, London-based JP Morgan technical analysts wrote.
"Attention focuses back to whether the Fed will keep hiking interest rates towards 6% for Fed funds. Our economics team continued to see the Fed only raising rates one more time at next month’s Federal Open Market Committee meeting to 5.5%," London-based UBS analysts wrote.
"Overall, we expect gold prices to remain highly volatile in the short term as the co-existence of both bullish and bearish factors in the market at present, is likely to leave scope for swift changes in sentiment," Absa/Barclays analysts wrote.
"Concerns over the Lebanon-Israeli dispute should favour gold as a safe haven asset, as opposed to a strengthening dollar - and increased expectations over further Fed tightening which instead, are likely to prove bearish for gold in the short term," said Absa/Barclays.
Important developments might come from testimony on the US economy by US Federal Reserve chairman Ben Bernanke this afternoon, said the bank.
"The view that US rates will continue to increase has dampened gold’s spirits although the tensions in the Middle East will generate some safe-haven support. For now support should be found back at $618/oz and $610/oz, the bottom of the current channel," UK-based TheBullionDesk.com analyst James Moore wrote.
Platinum was last quoted at $1,210/oz, down $8/oz from yesterday’s close, while palladium was last quoted at $305,50/oz, $2/oz lower than the previous close.
Both platinum and palladium failed to hold their respective support levels at $1,200/oz and $305/oz respectively on the Tokyo Commodity Exchange, Moore wrote.
Next support would be below $1,185/oz for platinum and $285/oz for palladium, he said.
Gold fell to a one-week low on Wednesday ahead of congressional testimony from Federal Reserve Chairman Ben Bernanke, who is expected to offer clues on whether or not U.S. interest rates will rise in August.
A rise in interest rates tends to make the dollar attractive and puts pressure on gold as an alternative investment.
Spot gold fell to $625.25/626.05 an ounce from $630.30/631.30 late in New York on Tuesday.
Gold hit a two-month high of $676 an ounce on Monday as worsening conflict between Israel and Hizbollah guerrillas ignited safe-haven buying. But profit-taking and a firming U.S. dollar later erased much of the gains.
"I still feel that the geo-political arena is underpinning it. It's certainly providing support and it has the potential to blow up," said Darren Heathcote, head of trading at Investec Australia in Sydney.
"If it escalates to Syria and Iran, I guess there's a potential for gold to probably push through recent highs again, to break back through $670s if that should happen," he said.
Israel struck Lebanon from the air and made pinpoint attacks across the border on Wednesday as thousands awaited evacuation and the death toll mounted in a conflict that has entered its second week with no end in sight.
U.S. President George W. Bush described Hizbollah as the root cause of the current conflict and said Syria, which supports the Shi'ite Muslim group, was trying to "get back into Lebanon" one year after ending its 29-year military presence.
World powers have said Hizbollah must first free two captured soldiers and stop cross-border attacks. Israel has also demanded that Hizbollah disarm in line with U.N. Security Council resolutions.
"Somewhere around $624 is probably more likely to be support. On the top side....we'll probably find some resistance coming in the late $650s," said Heathcote of Investec Australia.
"Anything can happen," he said.
Tokyo gold futures tumbled by their daily limit due to liquidation by Japanese investors as a stronger dollar and recent falls in oil prices undermined sentiment.
Benchmark gold futures on the Tokyo Commodity Exchange fell 60 yen to 2,422 yen per gram but some dealers said gold's fundamentals remained strong.
"This is purely a technical correction as gold has been overbought recently," said Takashi Ogura, a risk management section manager at Kanetsu Asset Management.
"We may see more technical sales, but gold will be well protected as there are plenty of bargain-hunters willing to buy based on its bullish underlying fundamentals."
The dollar held near three-month highs against the euro and the yen ahead of Bernanke's testimony and U.S. consumer price data for June, with the market bubbling with expectations the Fed could lift rates next month for an 18th straight time to 5.5 percent.
The euro was quoted at $1.2495 just off a three-month low of $1.2473 hit on electronic trading platform EBS on Tuesday.
The dollar was quoted around 117.25 yen not far from a three-month peak of 117.59 yen marked on EBS on Tuesday.
Platinum fell to $1,205/1,210 an ounce from $1,217/1,223 late in New York. Sister metal palladium also fell to $304/309 an ounce from $308/313
Silver inched up $10.50/10.56 an ounce from $10.48/10.58 late in New York.
Precious Metals Prices by 0433 GMT* Metal Last Net change Pct Move Gold 627.25 -3.45 -0.55 Platinum 1207.00 -10.00 -0.82 Palladium 304.00 -4.00 -1.30 Silver 10.54 0.06 +0.57 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 627.25 517.20 +21.28 Platinum 1207.00 968.00 +24.69 Palladium 304.00 254.00 +19.69 Silver 10.54 8.81 +19.64 * The closing prices used to calculate the net change may differ from New York's last quoted prices.
A rise in interest rates tends to make the dollar attractive and puts pressure on gold as an alternative investment.
Spot gold fell to $625.25/626.05 an ounce from $630.30/631.30 late in New York on Tuesday.
Gold hit a two-month high of $676 an ounce on Monday as worsening conflict between Israel and Hizbollah guerrillas ignited safe-haven buying. But profit-taking and a firming U.S. dollar later erased much of the gains.
"I still feel that the geo-political arena is underpinning it. It's certainly providing support and it has the potential to blow up," said Darren Heathcote, head of trading at Investec Australia in Sydney.
"If it escalates to Syria and Iran, I guess there's a potential for gold to probably push through recent highs again, to break back through $670s if that should happen," he said.
Israel struck Lebanon from the air and made pinpoint attacks across the border on Wednesday as thousands awaited evacuation and the death toll mounted in a conflict that has entered its second week with no end in sight.
U.S. President George W. Bush described Hizbollah as the root cause of the current conflict and said Syria, which supports the Shi'ite Muslim group, was trying to "get back into Lebanon" one year after ending its 29-year military presence.
World powers have said Hizbollah must first free two captured soldiers and stop cross-border attacks. Israel has also demanded that Hizbollah disarm in line with U.N. Security Council resolutions.
"Somewhere around $624 is probably more likely to be support. On the top side....we'll probably find some resistance coming in the late $650s," said Heathcote of Investec Australia.
"Anything can happen," he said.
Tokyo gold futures tumbled by their daily limit due to liquidation by Japanese investors as a stronger dollar and recent falls in oil prices undermined sentiment.
Benchmark gold futures on the Tokyo Commodity Exchange fell 60 yen to 2,422 yen per gram but some dealers said gold's fundamentals remained strong.
"This is purely a technical correction as gold has been overbought recently," said Takashi Ogura, a risk management section manager at Kanetsu Asset Management.
"We may see more technical sales, but gold will be well protected as there are plenty of bargain-hunters willing to buy based on its bullish underlying fundamentals."
The dollar held near three-month highs against the euro and the yen ahead of Bernanke's testimony and U.S. consumer price data for June, with the market bubbling with expectations the Fed could lift rates next month for an 18th straight time to 5.5 percent.
The euro was quoted at $1.2495 just off a three-month low of $1.2473 hit on electronic trading platform EBS on Tuesday.
The dollar was quoted around 117.25 yen not far from a three-month peak of 117.59 yen marked on EBS on Tuesday.
Platinum fell to $1,205/1,210 an ounce from $1,217/1,223 late in New York. Sister metal palladium also fell to $304/309 an ounce from $308/313
Silver inched up $10.50/10.56 an ounce from $10.48/10.58 late in New York.
Precious Metals Prices by 0433 GMT* Metal Last Net change Pct Move Gold 627.25 -3.45 -0.55 Platinum 1207.00 -10.00 -0.82 Palladium 304.00 -4.00 -1.30 Silver 10.54 0.06 +0.57 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 627.25 517.20 +21.28 Platinum 1207.00 968.00 +24.69 Palladium 304.00 254.00 +19.69 Silver 10.54 8.81 +19.64 * The closing prices used to calculate the net change may differ from New York's last quoted prices.
Glamis Gold Ltd. (GLG.NYSE) said on Tuesday that it had reached a tax agreement with Guatemala to begin paying income tax effective July 1.
The gold production company said that the income tax will be approximately $4.8 million in 2006 and $10 million in 2007, based on current production guidance, and that taxes will go toward improvements in services and infrastructure near the Marlin Mine.
The gold production company said that the income tax will be approximately $4.8 million in 2006 and $10 million in 2007, based on current production guidance, and that taxes will go toward improvements in services and infrastructure near the Marlin Mine.
Tuesday, July 18, 2006
Freeport-McMoRan Copper & Gold Inc. (NYSE FCX) downwardly revised its sales estimates for copper and gold through 2008 by 4.6 percent and 3.1 percent respectively, but said it expects an increase in gold output for 2009 and 2010, with copper holding steady in those years.
In its second quarter performance report released Tuesday, the mining company layed out five-year sales projections for the PT-Freeport Indonesia (PT-FI) mining affiliate's share of both copper and gold at the giant Grasberg mine in Indonesia.
Freeport owns 90.6 percent of the PT-FI operating unit. The government of Indonesia the owns the remaining 9.4 percent.
The company cited new geotechnical data about the mine's ore deposits for its revised production plan. An updated mine design will take slightly longer to execute than previously thought, it said.
As a result, for 2006, the company said it now expects PT-FI's share of sales at 1.2 billion lbs for copper versus previous estimates of 1.3 billion lbs. Copper sales expectations were revised down to 1.1 billion lbs in 2007 from the 1.2 billion lbs expected previously. And in 2008, it projects 1.4 billion lbs in copper sales compared with 1.5 billion lbs in earlier forecasts.
By 2009, estimates held steady at 1.2 billion lbs of copper and 2010 sales were still anticipated at 1.3 billion lbs.
Gold sales were seen remaining at 1.7 million ounces in 2006 and falling in 2007 to 1.8 million ounces from the 20.0 million ounces projected earlier.
In 2008, Freeport foresees gold sales of 1.9 million ounces, down from 2.4 million ounces projected previously.
Sales should increase by 2009 to 1.8 million ounces, up from 1.6 million ounces forecast earlier for gold sales. Gold sales were also revised up to 2.1 million ounces in 2010 from forecasts of 1.9 million ounces in earlier reports.
Total sales for the five years are now expected to be 6.2 billion lbs for copper, down from 6.5 billion lbs projected previously. And total gold sales through 2010 are now seen at 9.3 million ounces, down from 9.6 million ounces forecast previously.
Because there is more demand for the company's high-grade ore than it can meet, its sales generally match production figures with only slight variation.
In the second quarter, however, sales fell below production by more than usual because of weather-related shipping delays.
Freeport sold 221 million lbs of copper in the second quarter, whereas it produced 237 million lbs, it said.
The mining company also said it continues to analyze its longer range mine plans to assess the optimal design of the Grasberg open pit, which may affect the timing of development of the Grasberg underground block cave ore body.
PT-FI expects to complete the current long-range studies by the end of 2006, it said.
In its second quarter performance report released Tuesday, the mining company layed out five-year sales projections for the PT-Freeport Indonesia (PT-FI) mining affiliate's share of both copper and gold at the giant Grasberg mine in Indonesia.
Freeport owns 90.6 percent of the PT-FI operating unit. The government of Indonesia the owns the remaining 9.4 percent.
The company cited new geotechnical data about the mine's ore deposits for its revised production plan. An updated mine design will take slightly longer to execute than previously thought, it said.
As a result, for 2006, the company said it now expects PT-FI's share of sales at 1.2 billion lbs for copper versus previous estimates of 1.3 billion lbs. Copper sales expectations were revised down to 1.1 billion lbs in 2007 from the 1.2 billion lbs expected previously. And in 2008, it projects 1.4 billion lbs in copper sales compared with 1.5 billion lbs in earlier forecasts.
By 2009, estimates held steady at 1.2 billion lbs of copper and 2010 sales were still anticipated at 1.3 billion lbs.
Gold sales were seen remaining at 1.7 million ounces in 2006 and falling in 2007 to 1.8 million ounces from the 20.0 million ounces projected earlier.
In 2008, Freeport foresees gold sales of 1.9 million ounces, down from 2.4 million ounces projected previously.
Sales should increase by 2009 to 1.8 million ounces, up from 1.6 million ounces forecast earlier for gold sales. Gold sales were also revised up to 2.1 million ounces in 2010 from forecasts of 1.9 million ounces in earlier reports.
Total sales for the five years are now expected to be 6.2 billion lbs for copper, down from 6.5 billion lbs projected previously. And total gold sales through 2010 are now seen at 9.3 million ounces, down from 9.6 million ounces forecast previously.
Because there is more demand for the company's high-grade ore than it can meet, its sales generally match production figures with only slight variation.
In the second quarter, however, sales fell below production by more than usual because of weather-related shipping delays.
Freeport sold 221 million lbs of copper in the second quarter, whereas it produced 237 million lbs, it said.
The mining company also said it continues to analyze its longer range mine plans to assess the optimal design of the Grasberg open pit, which may affect the timing of development of the Grasberg underground block cave ore body.
PT-FI expects to complete the current long-range studies by the end of 2006, it said.
Gold futures closed down more than $20 Tuesday, pressured by the rallying dollar as investors sought refuge from Mideast turmoil in the American currency. Gold for August delivery ended down $22.40 at $629.50 an ounce on the New York Mercantile Exchange. Other metals prices also declined. Silver dropped 56.50 cents at $10.525 an ounce and copper edged down 2.50 cents at $3.5745 a pound. Platinum declined $15.40 at $1,234.60 an ounce and palladium dropped $8 at $314.20 an ounce.
TORONTO, July 18 - Centerra Gold lowered 2006 production forecasts for its Kumtor mine in Central Asia and is assessing forecasts for 2007 after a pit wall ground movement at the mine, the company said on Tuesday.
The company said output at the Kumtor mine for 2006 is now expected to be 300,000 ounces at a cash cost of about $530 per ounce, down from its previous projection for output of 410,000 to 420,000 ounces of poured gold in 2006 at a cash cost of $370 to $380 per ounce.
The company said output at the Kumtor mine for 2006 is now expected to be 300,000 ounces at a cash cost of about $530 per ounce, down from its previous projection for output of 410,000 to 420,000 ounces of poured gold in 2006 at a cash cost of $370 to $380 per ounce.
Gold for August delivery was last down $3.60 at $648.30 an ounce on the New York Mercantile Exchange. The metal dropped more than $16 on Monday.
Other metals prices were mixed. Silver was down 13 cents at $10.97 an ounce and copper added 0.6 cent at $3.605 a pound. Platinum declined $14 at $1,236 an ounce and palladium dropped $6.20 at $316 an ounce.
"After halting its decline at the $640 mark, gold rebounded to $650 in the wake of news that attacks in Beirut are intensifying and that Israel has set cease-fire conditions which are likely to be met with Hezbollah's refusal," said Jon Nadler, an analyst at Kitco.com.
British Prime Minister Tony Blair and U.N. Secretary-General Kofi Annan have called for an international force to be sent to Lebanon to halt the fighting, but the U.S. and Israel have expressed skepticism about the proposal.
"The trend [for gold] remains upward, but the damage wrought yesterday as rumors of peace and talk of cease-fire ran rampant was material," said Dennis Gartman of The Gartman Letter.
The markets are also looking forward to Federal Reserve Chairman Ben Bernanke's semiannual report on monetary policy to the Senate Banking Committee on Wednesday.
"With the dollar still firm ahead of tomorrow's address by Fed Chairman Bernanke, gold is likely to remain pressured and looks set to spend more time in the $610-$655 area," Moore said. He added, however, that tensions in the Middle East could generate further gold price hikes.
Kitco.com's Nadler said that Bernanke might testify that stagflation is plaguing the American economy.
"Regardless of the causes, stagflation is an undesirable set of conditions to have," Nadler said. "It is, however, an environment in which gold normally (and historically) makes forward progress."
On the supply side, copper inventories were down 282 short tons as of late Monday, according to Nymex data. Silver supplies rose by 595,295 troy ounces to 102.7 million.
Other metals prices were mixed. Silver was down 13 cents at $10.97 an ounce and copper added 0.6 cent at $3.605 a pound. Platinum declined $14 at $1,236 an ounce and palladium dropped $6.20 at $316 an ounce.
"After halting its decline at the $640 mark, gold rebounded to $650 in the wake of news that attacks in Beirut are intensifying and that Israel has set cease-fire conditions which are likely to be met with Hezbollah's refusal," said Jon Nadler, an analyst at Kitco.com.
British Prime Minister Tony Blair and U.N. Secretary-General Kofi Annan have called for an international force to be sent to Lebanon to halt the fighting, but the U.S. and Israel have expressed skepticism about the proposal.
"The trend [for gold] remains upward, but the damage wrought yesterday as rumors of peace and talk of cease-fire ran rampant was material," said Dennis Gartman of The Gartman Letter.
The markets are also looking forward to Federal Reserve Chairman Ben Bernanke's semiannual report on monetary policy to the Senate Banking Committee on Wednesday.
"With the dollar still firm ahead of tomorrow's address by Fed Chairman Bernanke, gold is likely to remain pressured and looks set to spend more time in the $610-$655 area," Moore said. He added, however, that tensions in the Middle East could generate further gold price hikes.
Kitco.com's Nadler said that Bernanke might testify that stagflation is plaguing the American economy.
"Regardless of the causes, stagflation is an undesirable set of conditions to have," Nadler said. "It is, however, an environment in which gold normally (and historically) makes forward progress."
On the supply side, copper inventories were down 282 short tons as of late Monday, according to Nymex data. Silver supplies rose by 595,295 troy ounces to 102.7 million.
Monday, July 17, 2006
Oil held firm above $75 a barrel on Tuesday after a profit-taking slump, supported by accelerating economic expansion in number-two oil consumer China and the risk of expanding Middle East violence.
U.S. light sweet crude for August delivery rose 15 cents to $75.45 a barrel by 0327 GMT, taking pause from Monday's 2.25 percent dive amid a commodity-wide rout that knocked gold 2 percent lower and hammered copper 3 percent.
Brent crude for September gained 6 cents to $75.98 a barrel.
Oil prices are nearly $3 below last Friday's record-high of $78.40 after dealers took some relief that mounting violence between Israel and Hizbollah had not yet engulfed oil-rich neighbours. But analysts warned against complacency.
"There is the danger that the Middle East situation could spin out of control, but there is also a good chance that things will settle down," said Tony Nunan, a risk manager at Mitsubishi Corp. in Tokyo.
World efforts to defuse the growing crisis have yet to show any signs of ending Israel's week-long assault in retaliation against Hizbollah attacks. On Tuesday warplane attacks on south Lebanon killed six people, taking the toll to 210.
Hizbollah, the guerrilla group that is backed by Syria and Iran and is part of Lebanon's government, has attacked a naval vessel and fired hundreds of rockets at northern Israel.
Oil traders fear the violence -- triggered when Hizbollah seized two Israeli soldiers and killed eight on July 12 – could engulf major regional crude oil producers, who provide nearly a third of the world's oil.
Lebanon has repeatedly called for an immediate ceasefire, but world powers said any solution to the crisis must include the release of the two soldiers. Israel also wants Hizbollah to disarm in line with United Nations Security Council resolutions.
"The market's biggest fear is that Iran, a financial backer of Hizbollah and OPEC's number two supplier, could be drawn into the conflict," said Andrew Harrington from ANZ Bank.
The conflict may also compound the haggling between the West and Iran over Tehran's nuclear programme, a stand-off that has fuelled oil's 24 percent gain this year on fears that the exporter could use its crude supplies as political leverage.
Iran funded and supplied Hizbollah during the 1980s, but denies supplying weapons in the latest round of violence, saying its support is purely moral rather than military.
Perennial tension in Iraq also kept prices on the boil, with the head of the country's North Oil Company kidnapped in the capital, the second high-profile abduction in two days. Iraq was forced to cancel its latest tender to sell Kirkuk crude from Turkey after halting pipeline exports 11 days ago.
U.S. light sweet crude for August delivery rose 15 cents to $75.45 a barrel by 0327 GMT, taking pause from Monday's 2.25 percent dive amid a commodity-wide rout that knocked gold 2 percent lower and hammered copper 3 percent.
Brent crude for September gained 6 cents to $75.98 a barrel.
Oil prices are nearly $3 below last Friday's record-high of $78.40 after dealers took some relief that mounting violence between Israel and Hizbollah had not yet engulfed oil-rich neighbours. But analysts warned against complacency.
"There is the danger that the Middle East situation could spin out of control, but there is also a good chance that things will settle down," said Tony Nunan, a risk manager at Mitsubishi Corp. in Tokyo.
World efforts to defuse the growing crisis have yet to show any signs of ending Israel's week-long assault in retaliation against Hizbollah attacks. On Tuesday warplane attacks on south Lebanon killed six people, taking the toll to 210.
Hizbollah, the guerrilla group that is backed by Syria and Iran and is part of Lebanon's government, has attacked a naval vessel and fired hundreds of rockets at northern Israel.
Oil traders fear the violence -- triggered when Hizbollah seized two Israeli soldiers and killed eight on July 12 – could engulf major regional crude oil producers, who provide nearly a third of the world's oil.
Lebanon has repeatedly called for an immediate ceasefire, but world powers said any solution to the crisis must include the release of the two soldiers. Israel also wants Hizbollah to disarm in line with United Nations Security Council resolutions.
"The market's biggest fear is that Iran, a financial backer of Hizbollah and OPEC's number two supplier, could be drawn into the conflict," said Andrew Harrington from ANZ Bank.
The conflict may also compound the haggling between the West and Iran over Tehran's nuclear programme, a stand-off that has fuelled oil's 24 percent gain this year on fears that the exporter could use its crude supplies as political leverage.
Iran funded and supplied Hizbollah during the 1980s, but denies supplying weapons in the latest round of violence, saying its support is purely moral rather than military.
Perennial tension in Iraq also kept prices on the boil, with the head of the country's North Oil Company kidnapped in the capital, the second high-profile abduction in two days. Iraq was forced to cancel its latest tender to sell Kirkuk crude from Turkey after halting pipeline exports 11 days ago.
The price of gold declined Monday as investors took profits following the metal's recent ascent, sending shares of gold producers lower.
"Broadly speaking, its a heavy dose of profit-taking," said HSBC metals trader Jim Steel. "The market has been up quite dramatically over the last several days, mostly on safe-haven buying."
August gold fell $19.70 to $648.30 an ounce in midday trading on the New York Mercantile Exchange. The contract had climbed to a six-week, intraday high of $669 on Friday, boosted by increased fund buying.
Shares of gold producers declined in tandem. Newmont Mining Corp. shares dropped $1.41, or 2.6 percent, to $53.55 on the New York Stock Exchange, where Goldcorp Inc. shares fell 87 cents, or 2.9 percent, to $28.93. Freeport McMoran Copper & Gold Inc. saw its stock lose $1.97, or 3.6 percent, to $52.43 on the Big Board.
Elsewhere in the metals market, silver retreated 43 cents to $11.10 an ounce. Copper shed 15 cents to $3.56 a pound.
Copper producer Phelps Dodge Corp. saw its shares slide $2.45, or 3.1 percent, to $77.34 on the NYSE.
"Broadly speaking, its a heavy dose of profit-taking," said HSBC metals trader Jim Steel. "The market has been up quite dramatically over the last several days, mostly on safe-haven buying."
August gold fell $19.70 to $648.30 an ounce in midday trading on the New York Mercantile Exchange. The contract had climbed to a six-week, intraday high of $669 on Friday, boosted by increased fund buying.
Shares of gold producers declined in tandem. Newmont Mining Corp. shares dropped $1.41, or 2.6 percent, to $53.55 on the New York Stock Exchange, where Goldcorp Inc. shares fell 87 cents, or 2.9 percent, to $28.93. Freeport McMoran Copper & Gold Inc. saw its stock lose $1.97, or 3.6 percent, to $52.43 on the Big Board.
Elsewhere in the metals market, silver retreated 43 cents to $11.10 an ounce. Copper shed 15 cents to $3.56 a pound.
Copper producer Phelps Dodge Corp. saw its shares slide $2.45, or 3.1 percent, to $77.34 on the NYSE.
Gold tumbled in late trading in London on Monday as investors locked in profits after the metal earlier hit a two-month high on conflict in the Middle East.
Gold fell while the dollar rose as the market reacted to a TV report that Israel's offensive in Lebanon could end in days, but the drop was exaggerated, a dealer said.
"It took gold off a touch but I think it's been overdone, it's gone a bit too far down. Oil fell as well, which added fuel to the fire."
"I think we'll see it edging back to $650."
Spot gold rose as high as $676.00 an ounce before falling more than four percent to $646.70/648.20 by 1444 GMT, against $666.30/667.80 late in New York on Friday. At Monday's high, gold was nine percent higher from a week ago.
Safe-haven gold buying had picked up in early trade as Israel bombarded Lebanon for a sixth day on Monday and dismissed as premature a proposal for an international stability force to help end the worst fighting across the Israeli-Lebanese border in more than 20 years.
"Most of it (Middle East tension) has been factored in. Of course if we see any escalation in the tension, then you can see some additional buying coming through," said Michael Widmer, analyst at Macquarie Bank.
Gold also came under pressure because of a rally in the dollar that rose one percent against European currencies and hit a three-month high versus the yen.
A stronger U.S. currency makes dollar-priced gold costlier for holders of other currencies and lower demand for the metal.
Mining shares were mixed.
Newmont Mining was down more than two percent by 1458 GMT, while Barrick Gold was up slightly.
Oil prices fell in volatile trading on Monday, but were not far from record highs.
In other precious metals, platinum fell to $1,237/1,242 an ounce from $1,249/1,255 late in New York, while palladium was at $318/323 an ounce, down from $323/328.
Silver fell to $11.00/11.10 an ounce from $11.46/11.56 in the U.S. market.
Gold fell while the dollar rose as the market reacted to a TV report that Israel's offensive in Lebanon could end in days, but the drop was exaggerated, a dealer said.
"It took gold off a touch but I think it's been overdone, it's gone a bit too far down. Oil fell as well, which added fuel to the fire."
"I think we'll see it edging back to $650."
Spot gold rose as high as $676.00 an ounce before falling more than four percent to $646.70/648.20 by 1444 GMT, against $666.30/667.80 late in New York on Friday. At Monday's high, gold was nine percent higher from a week ago.
Safe-haven gold buying had picked up in early trade as Israel bombarded Lebanon for a sixth day on Monday and dismissed as premature a proposal for an international stability force to help end the worst fighting across the Israeli-Lebanese border in more than 20 years.
"Most of it (Middle East tension) has been factored in. Of course if we see any escalation in the tension, then you can see some additional buying coming through," said Michael Widmer, analyst at Macquarie Bank.
Gold also came under pressure because of a rally in the dollar that rose one percent against European currencies and hit a three-month high versus the yen.
A stronger U.S. currency makes dollar-priced gold costlier for holders of other currencies and lower demand for the metal.
Mining shares were mixed.
Newmont Mining was down more than two percent by 1458 GMT, while Barrick Gold was up slightly.
Oil prices fell in volatile trading on Monday, but were not far from record highs.
In other precious metals, platinum fell to $1,237/1,242 an ounce from $1,249/1,255 late in New York, while palladium was at $318/323 an ounce, down from $323/328.
Silver fell to $11.00/11.10 an ounce from $11.46/11.56 in the U.S. market.
Sunday, July 16, 2006
Gold climbed to its highest level in almost two months around $673 an ounce on Monday as tensions escalated in the Middle East and ignited safe-haven buying.
The metal also defied a firm dollar and found support from crude oil, which moved toward record highs above $78 a barrel because of worsening conflict between Israel and Hizbollah guerrillas.
Spot gold hit a high of $673.80 an ounce before dipping to $672.00/673.50 an ounce by 0337 GMT on profit taking.
It was still higher than the $666.30/667.80 late in New York on Friday but remained below a 26-year high of $730 an ounce hit in mid-May.
"It looks like gold is certainly going to test higher at some point, unless it calms down which looks very unlikely. We don't seem to have any rationality when it comes to dealing with the Middle East," said Darren Heathcote, head of trading at Investec Australia in Sydney.
Israeli warplanes blasted Lebanon on Monday killing 17 people after Hizbollah rockets struck deeper into Israel than ever before.
The crisis has escalated day by day with Hizbollah rocket attacks killing eight people in the Israeli city of Haifa on Sunday, the Islamist group's deadliest hit on Israel.
With no diplomatic initiative in sight to end the fighting, analysts said the conflict could spread through the Middle East to include Iran and Syria and roil a region that supplies almost a third of the world's crude oil.
Israel's launched military campaign in Lebanon after Hizbollah captured the two Israeli soldiers and killed eight. The violence has killed a total 162 people, all but 13 of them civilians.
Gold is often bought as a hedge against inflation and for future sales in times of trouble.
"It looks like we might hang around at about $678 on the top side. On the bottom side, I think the support is going to come in around $652," said Heathcote.
Tokyo Commodity Market was closed on Monday for a public holiday. The benchmark June 2007 gold contract on TOCOM surged as much as 60 yen to 2,497 yen ($21.51) per gram on Friday, the highest since May 18. It ended 54 yen higher at 2,491 yen.
"It's tense at the moment and the market has refused to come down. But with the Japanese out of the market, I am not sure who's left to buy," said a dealer in Singapore.
"We've broken the $650 level and that's why the price is going up. You will now start to look at the $640 to $700 range," he said.
The dollar extended its gains against the yen and euro as conflict in the Middle East drove investors toward the world's most liquid currency.
The dollar rose to a two-week high of 116.38 yen before retreating. The euro inched down to $1.2622.
Some dealers said tensions in the Middle East and strong crude oil had boosted gold's appeal but only a further escalation in the conflict could spur more buying from funds and speculators and help the metal retest this year's peak.
In other precious metals, platinum rose to $1,252/1,258 an ounce from $1,249/1,255 late in New York.
Sister metal palladium gained to $329/335 an ounce from $323/328.
Silver inched up to $11.58/11.68 an ounce from $11.46/11.56 late in New York.
Precious Metals Prices by 0335 GMT*
Metal Last Net change Pct Move
Gold 672.30 8.60 +1.30
Platinum 1252.00 3.00 +0.24
Palladium 329.00 6.00 +1.86
Silver 11.58 0.15 +1.31
Change so far in 2006
Metal Latest bid End prev year Pct Move
Gold 672.30 517.20 +29.99
Platinum 1252.00 968.00 +29.34
Palladium 329.00 254.00 +29.53
Silver 11.58 8.81 +31.44
The metal also defied a firm dollar and found support from crude oil, which moved toward record highs above $78 a barrel because of worsening conflict between Israel and Hizbollah guerrillas.
Spot gold hit a high of $673.80 an ounce before dipping to $672.00/673.50 an ounce by 0337 GMT on profit taking.
It was still higher than the $666.30/667.80 late in New York on Friday but remained below a 26-year high of $730 an ounce hit in mid-May.
"It looks like gold is certainly going to test higher at some point, unless it calms down which looks very unlikely. We don't seem to have any rationality when it comes to dealing with the Middle East," said Darren Heathcote, head of trading at Investec Australia in Sydney.
Israeli warplanes blasted Lebanon on Monday killing 17 people after Hizbollah rockets struck deeper into Israel than ever before.
The crisis has escalated day by day with Hizbollah rocket attacks killing eight people in the Israeli city of Haifa on Sunday, the Islamist group's deadliest hit on Israel.
With no diplomatic initiative in sight to end the fighting, analysts said the conflict could spread through the Middle East to include Iran and Syria and roil a region that supplies almost a third of the world's crude oil.
Israel's launched military campaign in Lebanon after Hizbollah captured the two Israeli soldiers and killed eight. The violence has killed a total 162 people, all but 13 of them civilians.
Gold is often bought as a hedge against inflation and for future sales in times of trouble.
"It looks like we might hang around at about $678 on the top side. On the bottom side, I think the support is going to come in around $652," said Heathcote.
Tokyo Commodity Market was closed on Monday for a public holiday. The benchmark June 2007 gold contract on TOCOM surged as much as 60 yen to 2,497 yen ($21.51) per gram on Friday, the highest since May 18. It ended 54 yen higher at 2,491 yen.
"It's tense at the moment and the market has refused to come down. But with the Japanese out of the market, I am not sure who's left to buy," said a dealer in Singapore.
"We've broken the $650 level and that's why the price is going up. You will now start to look at the $640 to $700 range," he said.
The dollar extended its gains against the yen and euro as conflict in the Middle East drove investors toward the world's most liquid currency.
The dollar rose to a two-week high of 116.38 yen before retreating. The euro inched down to $1.2622.
Some dealers said tensions in the Middle East and strong crude oil had boosted gold's appeal but only a further escalation in the conflict could spur more buying from funds and speculators and help the metal retest this year's peak.
In other precious metals, platinum rose to $1,252/1,258 an ounce from $1,249/1,255 late in New York.
Sister metal palladium gained to $329/335 an ounce from $323/328.
Silver inched up to $11.58/11.68 an ounce from $11.46/11.56 late in New York.
Precious Metals Prices by 0335 GMT*
Metal Last Net change Pct Move
Gold 672.30 8.60 +1.30
Platinum 1252.00 3.00 +0.24
Palladium 329.00 6.00 +1.86
Silver 11.58 0.15 +1.31
Change so far in 2006
Metal Latest bid End prev year Pct Move
Gold 672.30 517.20 +29.99
Platinum 1252.00 968.00 +29.34
Palladium 329.00 254.00 +29.53
Silver 11.58 8.81 +31.44
PHILEX Mining Corp said it is looking into the possibility of reopening its Bulawan gold mine in the central province of Negros Occidental in light of rising prices of the precious metal.
The mine was operated from 1996 to 2002 by Philex Gold Philippines Inc, a wholly owned unit of Philex Gold Inc, which is a subsidiary of publicly-listed Philex Mining. It was shut down because of lower gold prices at that time.
"Because of the currently encouraging level of gold prices, Philex Gold is reviewing the possibility of reopening the Bulawan mine, but there has been no decision yet in this regard," Philex Mining told the stock exchange.
The mine was operated from 1996 to 2002 by Philex Gold Philippines Inc, a wholly owned unit of Philex Gold Inc, which is a subsidiary of publicly-listed Philex Mining. It was shut down because of lower gold prices at that time.
"Because of the currently encouraging level of gold prices, Philex Gold is reviewing the possibility of reopening the Bulawan mine, but there has been no decision yet in this regard," Philex Mining told the stock exchange.
Saturday, July 15, 2006
Gold rose to a six-week high as investors bought the metal as a haven and a hedge against inflation, after escalating violence in the Middle East pushed crude oil to a record, according to Bloomberg.
Gold has jumped 8.4 per cent this month, after falling in May and June, as bombings in India and North Korea's missile tests led to increased demand for the precious metal. Gold and Treasuries rallied and global equity markets declined as investors sought safety for their money. Israel's air force struck targets in Lebanon for a third day.
``People are moving out of riskier assets, and into treasuries as well as gold,'' said David Holmes, director of precious metals at Dresdner Kleinwort Group in London. ``Investor demand for gold has pushed the price higher.''
Gold for August delivery rose $13.60, or 2.1 per cent, to $668 an ounce on the Comex division of the New York Mercantile Exchange, after reaching $669, the highest for a most-active contract since May 30. Gold for immediate delivery rose $6.90, or 1 per cent, to $666.95 at 7:05 p.m. in London, up 6 per cent this week.
The Standard & Poor's 500 Index fell for a third day, down 0.7 per cent to 1233.8 at 2:11 p.m. in New York, and the Dow Jones Industrial Average fell 1.1 per cent to 10726.41.
Crude oil for August delivery rose 85 cents to $77.55 a barrel on the New York Mercantile Exchange, after earlier trading at a record $78.40. Oil has rallied 34 per cent in the past year.
``We also see buying in oil,'' Holmes said. Oil and gold markets ``are responding to the political uncertainties in the Middle East,'' he said.
Some investors buy gold as a store of value. Gold futures rose to $873 an ounce in 1980, the highest ever, after oil costs more than doubled and consumer prices reached 12 per cent.
``Flight-to-safety buying has been a major catalyst in gold's gains this week and is likely to be a feature next week,'' said James Moore, a Kettering, U.K.-based analyst at TheBullionDesk. Tensions in the Middle East and North Korea ``are likely to deepen before some form of agreement is met.''
As oil approaches $80, gold may be headed for $680, said Moore, who recommends buying gold next week.
Gold climbed 2.2 per cent last week in London as North Korea test-fired missiles into the Sea of Japan. Bullion surged 5.3 per cent on Sept. 11, 2001, the first day of trading after terrorists attacked the U.S.
Gold has jumped 8.4 per cent this month, after falling in May and June, as bombings in India and North Korea's missile tests led to increased demand for the precious metal. Gold and Treasuries rallied and global equity markets declined as investors sought safety for their money. Israel's air force struck targets in Lebanon for a third day.
``People are moving out of riskier assets, and into treasuries as well as gold,'' said David Holmes, director of precious metals at Dresdner Kleinwort Group in London. ``Investor demand for gold has pushed the price higher.''
Gold for August delivery rose $13.60, or 2.1 per cent, to $668 an ounce on the Comex division of the New York Mercantile Exchange, after reaching $669, the highest for a most-active contract since May 30. Gold for immediate delivery rose $6.90, or 1 per cent, to $666.95 at 7:05 p.m. in London, up 6 per cent this week.
The Standard & Poor's 500 Index fell for a third day, down 0.7 per cent to 1233.8 at 2:11 p.m. in New York, and the Dow Jones Industrial Average fell 1.1 per cent to 10726.41.
Crude oil for August delivery rose 85 cents to $77.55 a barrel on the New York Mercantile Exchange, after earlier trading at a record $78.40. Oil has rallied 34 per cent in the past year.
``We also see buying in oil,'' Holmes said. Oil and gold markets ``are responding to the political uncertainties in the Middle East,'' he said.
Some investors buy gold as a store of value. Gold futures rose to $873 an ounce in 1980, the highest ever, after oil costs more than doubled and consumer prices reached 12 per cent.
``Flight-to-safety buying has been a major catalyst in gold's gains this week and is likely to be a feature next week,'' said James Moore, a Kettering, U.K.-based analyst at TheBullionDesk. Tensions in the Middle East and North Korea ``are likely to deepen before some form of agreement is met.''
As oil approaches $80, gold may be headed for $680, said Moore, who recommends buying gold next week.
Gold climbed 2.2 per cent last week in London as North Korea test-fired missiles into the Sea of Japan. Bullion surged 5.3 per cent on Sept. 11, 2001, the first day of trading after terrorists attacked the U.S.
Friday, July 14, 2006
Gold futures closed higher Friday, rallying to over $660 an ounce, as violence between Israel and Lebanon drove crude oil prices to unprecedented highs, fuelling safe-haven demand for gold. Gold for August delivery finished up $13.60 at $668.0 an ounce on the New York Mercantile Exchange, its highest closing level since May 23. The yellow metal gained 5.2% this week. Other metals prices also posted gains. Silver added 4.50 cents at $11.530 an ounce and copper rose 3.60 cents at $3.7125 a pound. Platinum was up $3.50 at $1,267.50 an ounce and palladium settled up 45 cents at $334.50 an ounce.
Gold climbed to a seven-week high on Friday, as record oil prices and tensions across the Middle East helped the precious metal to gain two percent.
"It's a combination of things that're keeping people a bit nervous and keeping gold perhaps little bit more buoyant than we would expect," said Tony Dobra, a director at Standard Chartered Bank in London.
"Oil is up on political tension and so is gold. We saw yesterday a fall in the equities markets as well," he said.
Spot gold jumped as high as $667 an ounce near the end of European trade and was indicated at $666.00/667.50 by 1504 GMT, against $654.70/656.20 in New York late on Thursday.
Oil surged to record highs above $78 a barrel on fresh supply fears in the world's eighth-largest oil exporter, Nigeria, and political tension in the Middle East.
Israel struck Hizbollah targets and devastated a wide array of Lebanese civilian installations on Friday, drawing mounting world criticism of its tactics since Shi'ite fighters seized two of its soldiers and killed eight.
Gold is often bought as a hedge against inflation and for future sales in times of trouble. It hit a 26-year high of $730 an ounce in mid-May.
"Gold is following oil up, although the others (silver, platinum and palladium) haven't done an awful lot," one trader said.
"It's looking strong and all the stories this week have been pro-gold."
SAFE-HAVEN BUYING
Gold began its climb this week after a series of bombs hit railway carriages in India's financial hub Mumbai on Tuesday, killing about 180 people. Safe-haven buying also resurfaced after North Korea's missile test launches raised tensions.
"Dips continue to find support from bargain hunters," said James Moore, precious metals analyst at TheBullionDesk.com.
"With no sign of a let up in geopolitical tensions and oil prices potentially looking to test $80 a barrel, there is now scope for gold to test $680," he said.
Gold's strength came despite a surge in the dollar, which would usually dissuade investors from buying bullion, as concern over the escalating violence in the Middle East propted a safehaven rally.
In other precious metals, platinum crept up to $1,250/1,255 an ounce from $1,249/1,255 in New York, while palladium fell to $324/329 an ounce from $327/332.
Silver inched up to $11.58/11.68 an ounce from $11.52/11.62 in the U.S. market.
"It's a combination of things that're keeping people a bit nervous and keeping gold perhaps little bit more buoyant than we would expect," said Tony Dobra, a director at Standard Chartered Bank in London.
"Oil is up on political tension and so is gold. We saw yesterday a fall in the equities markets as well," he said.
Spot gold jumped as high as $667 an ounce near the end of European trade and was indicated at $666.00/667.50 by 1504 GMT, against $654.70/656.20 in New York late on Thursday.
Oil surged to record highs above $78 a barrel on fresh supply fears in the world's eighth-largest oil exporter, Nigeria, and political tension in the Middle East.
Israel struck Hizbollah targets and devastated a wide array of Lebanese civilian installations on Friday, drawing mounting world criticism of its tactics since Shi'ite fighters seized two of its soldiers and killed eight.
Gold is often bought as a hedge against inflation and for future sales in times of trouble. It hit a 26-year high of $730 an ounce in mid-May.
"Gold is following oil up, although the others (silver, platinum and palladium) haven't done an awful lot," one trader said.
"It's looking strong and all the stories this week have been pro-gold."
SAFE-HAVEN BUYING
Gold began its climb this week after a series of bombs hit railway carriages in India's financial hub Mumbai on Tuesday, killing about 180 people. Safe-haven buying also resurfaced after North Korea's missile test launches raised tensions.
"Dips continue to find support from bargain hunters," said James Moore, precious metals analyst at TheBullionDesk.com.
"With no sign of a let up in geopolitical tensions and oil prices potentially looking to test $80 a barrel, there is now scope for gold to test $680," he said.
Gold's strength came despite a surge in the dollar, which would usually dissuade investors from buying bullion, as concern over the escalating violence in the Middle East propted a safehaven rally.
In other precious metals, platinum crept up to $1,250/1,255 an ounce from $1,249/1,255 in New York, while palladium fell to $324/329 an ounce from $327/332.
Silver inched up to $11.58/11.68 an ounce from $11.52/11.62 in the U.S. market.
Thursday, July 13, 2006
Gold eased to trade around $650 an ounce on Thursday after a failed attempt to breach six-week highs, with the metal trapped by bargain-hunters and profit-takers in the absence of clear market direction.
But prices remained higher from the previous close in the U.S. market as high oil prices, increased tension in the Middle East and a drop in the dollar spurred some investors to add positions, dealers said.
"With the resistances in the $650-$655 band seemingly stubborn given gold's failure to hold on gains yesterday, the recent surge in prices could come under some corrective pressure, once the immediate reaction to the security worries wanes," Standard Bank said in its daily report.
Gold rose as high as $653.80 an ounce before falling to $650.00/651.00 by 1010 GMT, still above $647.80/649.30 an ounce late in New York on Wednesday, when it surged to $655.30.
Some dealers said investors were keen to take profits since gold prices had rebounded from a three-month low of $543 in mid-June. Gold hit a 26-year high of $730 in mid-May.
But Iran's nuclear stand-off with the West, recent North Korean missile tests launches, and the conflict between Israel and Hizbollah guerrillas in Lebanon would elevate gold's safe-haven appeal, they said.
NO BIG SELL OFF
"It's hard to sell heavily into this market looking at what's going on at the moment. If we continue to see an escalation in violence around the world, prices will go up still," said a precious metals dealer in London.
"I am looking for a move lower, if the political situation calms down," he added.
Dealers said they also would watch the currency and oil markets for leads.
Oil surged to record highs near $76 a barrel, while the dollar hit the day's lows against the euro.
A weak dollar makes gold cheaper for holders of other currencies, but the metal has not strictly followed the inverse relationship in the recent past.
"The market remains volatile, swinging between bargain hunting and profit taking," said Julia Hamblett, vice president at Dresdner Kleinwort.
But despite two-way movements in gold prices, analysts remained bullish on the prospects of the metal going forward.
"Longer term positive drivers are still in place and we expect gold to end the year close to $700 once more," said J.P. Morgan said in a report.
In other metals, platinum fell to $1,248/1,253 an ounce from $1,252/1,257 in New York, while palladium was flat at $325/330.
Silver inched up to $11.57/11.67 an ounce from $11.52/11.62 late in New York.
But prices remained higher from the previous close in the U.S. market as high oil prices, increased tension in the Middle East and a drop in the dollar spurred some investors to add positions, dealers said.
"With the resistances in the $650-$655 band seemingly stubborn given gold's failure to hold on gains yesterday, the recent surge in prices could come under some corrective pressure, once the immediate reaction to the security worries wanes," Standard Bank said in its daily report.
Gold rose as high as $653.80 an ounce before falling to $650.00/651.00 by 1010 GMT, still above $647.80/649.30 an ounce late in New York on Wednesday, when it surged to $655.30.
Some dealers said investors were keen to take profits since gold prices had rebounded from a three-month low of $543 in mid-June. Gold hit a 26-year high of $730 in mid-May.
But Iran's nuclear stand-off with the West, recent North Korean missile tests launches, and the conflict between Israel and Hizbollah guerrillas in Lebanon would elevate gold's safe-haven appeal, they said.
NO BIG SELL OFF
"It's hard to sell heavily into this market looking at what's going on at the moment. If we continue to see an escalation in violence around the world, prices will go up still," said a precious metals dealer in London.
"I am looking for a move lower, if the political situation calms down," he added.
Dealers said they also would watch the currency and oil markets for leads.
Oil surged to record highs near $76 a barrel, while the dollar hit the day's lows against the euro.
A weak dollar makes gold cheaper for holders of other currencies, but the metal has not strictly followed the inverse relationship in the recent past.
"The market remains volatile, swinging between bargain hunting and profit taking," said Julia Hamblett, vice president at Dresdner Kleinwort.
But despite two-way movements in gold prices, analysts remained bullish on the prospects of the metal going forward.
"Longer term positive drivers are still in place and we expect gold to end the year close to $700 once more," said J.P. Morgan said in a report.
In other metals, platinum fell to $1,248/1,253 an ounce from $1,252/1,257 in New York, while palladium was flat at $325/330.
Silver inched up to $11.57/11.67 an ounce from $11.52/11.62 late in New York.
Bouncing gold 'will soften' in 2 years
Thu, 13 Jul 2006
The gold price will bounce back to $700 a troy ounce within the next 12 months but will soften within two years, Randgold Resources CEO Mark Bristow said on Thursday.
By late afternoon, the spot price of gold was quoted at $654.92 an ounce, up $4.63/oz from the metal's Wednesday close.
"The influences on gold are more positive than negative," Bristow said during a media briefing.
A key concern for gold mining companies was the price of gold, which continued to eat into profitability, he added.
The price of spot Brent crude was last quoted at $75.51 a barrel, up $1.12 a barrel from the previous close.
Thu, 13 Jul 2006
The gold price will bounce back to $700 a troy ounce within the next 12 months but will soften within two years, Randgold Resources CEO Mark Bristow said on Thursday.
By late afternoon, the spot price of gold was quoted at $654.92 an ounce, up $4.63/oz from the metal's Wednesday close.
"The influences on gold are more positive than negative," Bristow said during a media briefing.
A key concern for gold mining companies was the price of gold, which continued to eat into profitability, he added.
The price of spot Brent crude was last quoted at $75.51 a barrel, up $1.12 a barrel from the previous close.
Wednesday, July 12, 2006
China's gold industry is expected to post a profit of 2.5 billion yuan in the first half of 2006, a year-on-year rise of 59 percent, according to a report from the National Development and Reform Commission (NDRC) released here on Wednesday.
Profits are being spurred by rising gold prices and increased production. Over the first six months of the year the price of gold on international markets climbed from 530 U.S. dollars per ounce on January 1 to 730 dollars on May 12 before declining to 614 dollars on June 30.
The NDRC report shows China's gold production in the first half of this year is expected to reach 110 tons, up 12 percent over the same period last year.
Gold production in the first five months climbed to 88.8 tons, up 12.44 percent over the same period last year, while profits soared 58 percent year on year to reach 2.1 billion yuan, the report said.
The report predicted China's gold industry is likely to see a 10 percent increase in profits this year.
Profits are being spurred by rising gold prices and increased production. Over the first six months of the year the price of gold on international markets climbed from 530 U.S. dollars per ounce on January 1 to 730 dollars on May 12 before declining to 614 dollars on June 30.
The NDRC report shows China's gold production in the first half of this year is expected to reach 110 tons, up 12 percent over the same period last year.
Gold production in the first five months climbed to 88.8 tons, up 12.44 percent over the same period last year, while profits soared 58 percent year on year to reach 2.1 billion yuan, the report said.
The report predicted China's gold industry is likely to see a 10 percent increase in profits this year.
Gold futures closed higher Wednesday, as political instability in the Middle East, India and North Korea fuelled safe-haven demand. Gold for August delivery ended the session up $8.10 at $651.20 an ounce on the New York Mercantile Exchange, its highest level since May 30. Other metals prices also posted gains. Silver added 0.5 cents $11.555 an ounce, platinum rose $13.60 at $1,267.60 an ounce and palladium was up 95 cents at $329.95 an ounce. Copper added 3 cents at $3.6650 a pound. End of Story
Gold rose to a six-week high on speculation that a terrorist attack in India that killed 183 people yesterday may spur demand from investors seeking precious metals as a haven asset.
India is the biggest buyer of gold, accounting for 23 percent of consumer demand last year, the producer-funded World Gold Council estimates. The bombings in Mumbai, the country's commercial hub, injured 714 and is the deadliest attack in the country in 13 years.
``All the Indians came into the market,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``It is panic buying. The geopolitical tensions just seem to be escalating. If that continues, gold goes higher.''
Gold futures for August delivery rose $8.10, or 1.3 percent, to $651.20 an ounce on the Comex division of the New York Mercantile Exchange, after reaching $657, the highest since May 31. Prices, which rose 2.7 percent yesterday, have rallied 19 percent since reaching a two-month low of $546.40 on June 14.
India's economic growth has helped fuel demand for gold, analysts said. Indian Finance Minister Palaniappan Chidambaram said the attacks in Mumbai won't hurt the economy, and he maintained his forecast for 8 percent growth this year.
While higher gold prices in the first quarter helped dampen demand from jewelers by 38 percent, investment demand rose 32 percent compared with a year earlier, the World Gold Council said. India purchased 587 tons to be made into jewelry last year, the most of any country.
Middle East Tension
Rising political tensions in the Middle East also helped sustain the gain in precious metals. The Lebanese militant group Hezbollah seized two Israeli soldiers this morning, 15 days after Israel's incursion into the Gaza Strip. Israel responded by firing aircraft missiles at 17 targets in south Lebanon.
``Political worries have no doubt been emphasized in investors' minds by Israel's incursion into Lebanon this morning,'' JPMorgan Chase & Co. metals analyst John Bridges wrote in a report. ``Yesterday's terrorist attacks in India are probably reminding investors that anti-western groups are active across the world.''
Gold, already up 52 percent in the past year, may rise on demand for the metal as an alternative currency to the U.S. dollar and the euro, some analysts said. Gold priced in U.S. dollar gained 18 percent last year while gold priced in euros and yen rose 36 percent.
Reserve Asset
Some of the world's smaller central banks have shown a ``steady tendency to own gold'' as a reserve asset, said Dennis Gartman, a gold trader, economist and editor of the Gartman Letter in Suffolk, Virginia.
Central banks in South Africa, China and Russia have said they wanted to increase their holdings of gold.
Today's rally in gold was limited by gains in the dollar, said Stephen Platt, a commodities analyst at Archer Financial Services Inc. in Chicago.
Gold generally moves in the opposite direction of the dollar, which gained today after a government report showed the U.S. trade deficit in May widened less than economists had forecast. A smaller trade gap means fewer dollars need to be sold to buy foreign goods.
``Given the strength of the dollar, gold probably won't improve upon the gains,'' Platt said. ``Investors could be a lot more cautious at these levels.''
India is the biggest buyer of gold, accounting for 23 percent of consumer demand last year, the producer-funded World Gold Council estimates. The bombings in Mumbai, the country's commercial hub, injured 714 and is the deadliest attack in the country in 13 years.
``All the Indians came into the market,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``It is panic buying. The geopolitical tensions just seem to be escalating. If that continues, gold goes higher.''
Gold futures for August delivery rose $8.10, or 1.3 percent, to $651.20 an ounce on the Comex division of the New York Mercantile Exchange, after reaching $657, the highest since May 31. Prices, which rose 2.7 percent yesterday, have rallied 19 percent since reaching a two-month low of $546.40 on June 14.
India's economic growth has helped fuel demand for gold, analysts said. Indian Finance Minister Palaniappan Chidambaram said the attacks in Mumbai won't hurt the economy, and he maintained his forecast for 8 percent growth this year.
While higher gold prices in the first quarter helped dampen demand from jewelers by 38 percent, investment demand rose 32 percent compared with a year earlier, the World Gold Council said. India purchased 587 tons to be made into jewelry last year, the most of any country.
Middle East Tension
Rising political tensions in the Middle East also helped sustain the gain in precious metals. The Lebanese militant group Hezbollah seized two Israeli soldiers this morning, 15 days after Israel's incursion into the Gaza Strip. Israel responded by firing aircraft missiles at 17 targets in south Lebanon.
``Political worries have no doubt been emphasized in investors' minds by Israel's incursion into Lebanon this morning,'' JPMorgan Chase & Co. metals analyst John Bridges wrote in a report. ``Yesterday's terrorist attacks in India are probably reminding investors that anti-western groups are active across the world.''
Gold, already up 52 percent in the past year, may rise on demand for the metal as an alternative currency to the U.S. dollar and the euro, some analysts said. Gold priced in U.S. dollar gained 18 percent last year while gold priced in euros and yen rose 36 percent.
Reserve Asset
Some of the world's smaller central banks have shown a ``steady tendency to own gold'' as a reserve asset, said Dennis Gartman, a gold trader, economist and editor of the Gartman Letter in Suffolk, Virginia.
Central banks in South Africa, China and Russia have said they wanted to increase their holdings of gold.
Today's rally in gold was limited by gains in the dollar, said Stephen Platt, a commodities analyst at Archer Financial Services Inc. in Chicago.
Gold generally moves in the opposite direction of the dollar, which gained today after a government report showed the U.S. trade deficit in May widened less than economists had forecast. A smaller trade gap means fewer dollars need to be sold to buy foreign goods.
``Given the strength of the dollar, gold probably won't improve upon the gains,'' Platt said. ``Investors could be a lot more cautious at these levels.''
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