Gold remained strong at the end of the week despite a rally in the markets, which got a boost from updates on US GDP and jobs as well as Ben Bernanke’s speech in Wyoming.
Analysts expected a downward revision of US GDP growth estimate for Q2 to 1.3%, however, the actual data showed a revision to 1.6%. This followed Thursday's jobless claims from the Labor Department. Initial claims were shown to have fallen by 31,000 to 473,000 in July, while continuing claims declined by 4.456 million. However, the less volatile four week moving average for the jobless claims rose by 3,250 to 486,250, the highest since November.
Prior to that, the markets were set to post another week of losses following bearish home sales data. On Tuesday, the National Association of Realtors said that existing home sales dipped 27.2% to an annualized rate of 3.83 million in July, the lowest level in 15 years. On top of that, the initially reported decline to 5.37 million in June was revised to show a steeper drop to 5.26 million.
Likewise, yesterday’s update on the Richmond Fed manufacturing index failed to inspire optimism, showing reductions in shipments and order backlog.
One day later, the US Commerce Department reported that new home sales dropped 12.4% in July to 276,000.
Fed Chairman offered a helping hand to the markets on Friday, stating that the economy was strong enough to grow next year and that the government would take the necessary steps to preclude a double dip recession.
The ensuing rally in the markets on both sides of the Atlantic did little to hit gold’s safe haven appeal as investors hesitated to pull money out of safe haven assets. After reaching an intraday high of US$1,242/oz, gold retreated to US$1,238/oz after starting the week below US$1,230/oz.
Silver and platinum stood at US$19.11/oz and US$1,531/oz after starting the week at US$18.01/oz and US$1,512/oz respectively.
A survey conducted by Bloomberg showed that investors and analysts were expecting gold to advance this week due to the growing concern over the speed of the economic recovery and fears of a double dip recession, spurred by the latest updates on US employment and manufacturing, as well as downbeat comments from the Federal Reserve and the Bank of England.
Earlier this month, Goldman Sachs projected bullion to reach US$1,300/oz within six months on speculative buying and a projected return to quantitative easing by the Fed.
Gold has benefitted heavily from the European debt crisis that has led to volatility in equity and commodity markets, leading to a stronger demand for safe haven assets. When worries over the strength of the economic recovery in the US and Europe’s debt woes peaked in June, gold reached new all time highs of US$1,265/oz.
Gold miners performed very well this week. Randgold Resources (LON:RRS) surged from 5,815 pence to 5,925 pence and African Barrick Gold (LON:ABG) advanced from 574 pence to 596 pence. Peer from the FTSE 250, Petropavlovsk (LON:POG), moved up from 1,018 pence to 1,033 pence.
Silver miner Fresnillo (LON:FRES) rallied from 988 pence to 1,056 pence. Another FTSE 100 constituent, platinum miner Lonmin (LON:LMI), improved from 1,504 pence to 1,529 pence.
Midcap silver producer Hochschild Mining (LON:HOC) slid from 326 pence to 322 pence and Aquarius Platinum (LON:AQP) climbed from 263 pence to 269 pence.
Small Cap News
AIM listed Sweden operating mineral exploration company Beowulf Mining (LON:BEM) was upbeat about its operational progress, but investors were selling shares after the company reported an increase in H1 losses.
Rambler Metals & Mining (LON:RMM, TSX-V:RAB) has taken “another dramatic step” in transforming to mine producer with the release of positive results of the feasibility study for its wholly owned Ming mine project.
Stratex International (LON:STI) told investors that infill drilling could make a “significant contribution” to the Altıntepe project. So far, in-fill drilling has cut between 14-38m of oxide and sulphide gold, with grades of 1.81-6.23g/t (grams per tonne).
London Mining’s (LON:LOND) extended drilling programme at its flagship Marampa project, in Sierra Leone, has uncovered two structures with an estimated inferred resource of 111 million tonnes (Mt) grading 33% iron. Consequently, the company is now targeting a steady-state 9 million tonnes per annum (Mtpa) mining operation, with more than a 20 year mine life.
Shanta Gold (LON:SHG) has been granted an Environmental Impact Assessment Certificate (EIAC) for the Chunya Gold Project in Tanzania - the final hurdle in obtaining a mining licence.
Shares in Noventa (LON:NVTA) has uncovered what could be a "significant additional deposit of Tantalum bearing ore on its existing Marropino licence area" (Mozambique). The discovery is part of Project Ligonha, announced on June 23.
European Nickel (LON:ENK, ASX:ENK) has appointed John Wallace McManus to its board of directors, where he will represent the Hunter Dickinson group (HDI) - a major shareholder and strategic partner.
Norseman Gold (LON:NGL) has restarted underground mining operations at the OK Decline, which forms part of the Norseman mine in western Australia. Mining was temporarily stopped at the decline following a fatality on 5 August 2010.
In accordance with JSE listing rules, Pan African Resources (LON:PAF) has provided a further upgrade to its earnings forecasts for the year ended 30th June 2010.
Looking ahead to Kenmare Resources’ (LON:KMR) interim results, due tomorrow, Dublin-based stockbroker JE Davy reflected on the company’s positive period, which has seen a “gradual improvement in operating parameters” at the Moma titanium mine.
Norseman Gold (LON:NGL) has announced an upgrade in both reserves and resources at its Western Australia mine. And in a statement to investors, the company said it expects reserves and resources to continue to expand over the next 12 months.
Australia and Solomon Islands operating gold and copper explorer Solomon Gold (LON:SOLG) reported strong progress and further encouraging results from its Queensland exploration projects, while announcing the recommencement of work on its Solomon Islands tenements.
Interim results from Landore Resources (AIM:LND) reflected a busy period for the London-listed Canadian miner. Losses were up only marginally at £2.1 million in the six months ended June 30. Exploration costs were the biggest part of the shortfall, rising £100,000 to almost £1.5 million.
Goldplat (LON:GDP) told investors that it expects the Kilimapesa Hill gold mining project to reach its full processing capacity by early September, after it received the green light to begin commercial production from existing stockpiles, while the mining lease is being finalised.
Mozambique-focused tantalum miner Noventa (LON:NVTA) has been making rapid progress since restarting its flagship Marropino mine in Mozambique. And today it reported an earlier than expected shipment of tantalum to one of the company’s two key customers.
Ascot Mining (PLUS:ASMP, XETRA:AM3) is progressing towards the completion of an expansion programme at its Chassoul gold mine in Costa Rica to triple its capacity and mitigate the impact of the suspension of mill and mine development at the La Toyota concession.
Oxus Gold’s (LON:OXS) 50%-owned Amantaytau Goldfields (AGF) joint venture has kicked off a five-year exploration programme in Uzbekistan. Through the $22m programme, AGF intends to expand its existing 2.4Moz JORC-complaint gold resource to over 7Moz.
Horizonte Minerals (LON:HZM) has signed a US$4.5 million earn in agreement with AngloGold Ashanti (JNB:ANG) to develop its Falcao gold project , located in the Carajas mineral province of northern Brazil. Under the terms of the deal Horizonte will receive US$900,000 exploration funding in the first year, followed by US$1.6 million in the second year and U$2 million in the third.
Large and Mid Cap News
BHP Billiton (LON:BHP) revealed “another strong set of results” for the first six-months of the year, with the major international mining group reporting 10% underlying earnings (EBITDA) growth to US$24.5bn and a 16% rise in attributable profit to $12.7bn.
Anglo-Swiss mining major Xstrata (LON:XTA) has agreed to acquire Sphere Minerals (ASX:APH) at a huge 61% premium to Monday’s closing price, valuing the company at US$383 million.
Bezant Resources (LON:BZT) has commissioned a conceptual mining study at its Mankayan copper-gold project on the Island of Luzon in the Philippines. The study will consider a potential underground mining operation . It is also expected to provide a recommendation for an optimum mining rate, as well as a preliminary implementation plan and a financial model.