logo-loader

Gold inches higher but outlook uncertain

Published: 23:17 23 Apr 2014 AEST

gold_us_350_5357be04bdc2d

Gold edged higher after six days of declines but the outlook remains cautious despite the ongoing problem in Ukraine. 

Broker pointed to firm equity markets and a rise in ten-year US Treasury bond yields, for making gold appear less attractive but it is the situation in China that may have sparked the latest bout of weakness.

It was the strength of Chinese demand last year that limited gold’s decline to 28% in the face of widespread selling by large investors through exchange traded funds (ETFs) with the hope that this same consumer demand would prompt a revival this year. 

But weak economic data out of China has hit the yuan, making gold more expensive for the locals, while last week’s revelation from the World Gold Council that 1,000 tonne of gold imports were being used for quasi-banking purpose has brought into question the premise that the Chinese consumer has caught gold fever.

Hopes that India, too, may regain its firmer position as the number one gold market have also been knocked back by recent government actions, while imports in April and May slowed to a trickle at just 20 tons. 

Spot gold was US$3 higher at US$1,287 ahead of the start of US trading.

Platinum, meanwhile, continued to drift as increased efforts to solve the 12-week strike in South Africa seemed destined to fail.

In South Africa, the talks that began yesterday between the platinum producers and the AMCU are continuing today. 

Reports from South Africa suggested that even the latest offer from the mines falls well short of the AMCU’s demands.

The union wants special payments on top of the offer of R12,500 per month by  mid-2017 offered, while the miners say the offer already includes these. 

Societe Generale commented that the AMCU seemed to be working with the Economic Freedom Fighters (EFF), a group advocating the nationalisation of land and mines, which could mean the industrial action continues up to the next elections in May.

Silver was a touch higher at US$19.45.

Major movers

Randgold Resources up 60p at 4,665p

Fresnillo up 1p at 849p

Anglo American up 5p at 1,544p

Australian Strategic Materials signs US$600 million LoI

Rowena Smith, CEO and managing director of Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF), joins Jonathan Jackson in the Proactive studio to discuss the company’ s Dubbo Project, in Central West New South Wales. This project aims to extract and process critical minerals and rare earth...

10 hours, 8 minutes ago