Deflation, Economic Slowdown Worries Hurt Gold

On Monday, gold prices fell and then rebounded from a six-week low on news that India’s gold imports are set to climb for the first time in six quarters. Gold fell more than 1 percent on Tuesday to just above the key price level of $1,700 an ounce, hit by economic worries that were fueled by poor earnings from major multinationals.

Gold prices fell briefly under $1,700 an ounce on Wednesday after the Fed gave no indication of an expansion of QE3 and made no change to its plan, announced in September, to buy $40 billion in mortgage-backed debt per month to pull interest rates down. The price recovered by day’s end to settle around $1,706 on Wednesday.

Adding to Wednesday’s worries was European Central Bank President Mario Draghi, who said the bank’s plan to buy government bonds will not lead to inflation. He added that deflation, or falling prices, is the greater risk in some European countries.

“Gold is not getting any support since people are not talking about an inflation spike,” Frank McGhee, the head dealer at Chicago’s Integrated Brokerage Services, told Bloomberg. “The slowdown concerns are also weighing on gold.”

Gold rebounded on Thursday and was headed for its biggest gain in three weeks as Brazil and Turkey’s central banks increased holdings of the precious metal. Gold futures for December delivery advanced 0.7 percent to $1,713 on the COMEX in New York. A close at that price would mark the biggest gain since October 4, according to Bloomberg.

Gold closed Thursday in New York at $1,710.30.

Gold producers, unions reach agreement in South Africa

In an update to last week’s Gold Investing News report, South African gold mine workers, operators and unions have reached a deal on wage increases, Reuters reported.

The National Union of Mineworkers and the gold industry, which employs around 157,000 people, announced that they have agreed to wage increases of between 1.5 and 10.8 percent. The negotiations lasted three weeks.

AngloGold Ashanti (ASX:AGG), the world’s third-largest gold producer, this week fired 12,000 workers who were on strike and did not return to work by the October 24 deadline, Reuters reported. AngloGold said its third-quarter production of 1.03 million ounces fell below its previous forecast of 1.1 million ounces.

Gold Fields (NYSE:GFI) made good on its ultimatum and fired 8,500 workers at its KDC East mine on October 23, Bloomberg reported. The company said that workers dismissed from the mine may appeal.

Company news

Goldcorp (TSX:G,NYSE:GG), Canada’s number-two gold miner, reported record quarterly revenues of $1.5 billion, generating adjusted net earnings of $441 million, or $0.54 per share, compared to $450 million, or $0.56 per share, in the third quarter of 2011. Reuters reported that on an adjusted basis, profit slipped, but still handily beat analysts’ expectations, sending shares up more than 3 percent shortly after the market opened.

Junior company news

Roxgold (TSXV:ROG) said diamond drill hole 223, which intersected 233.89 grams per ton of gold (uncut) over 4.5 meters, represents the most significant intercept to date within the 55 Zone at its 100-percent-owned Yaramoko gold deposit in West-Central Burkina Faso.

Eagle Hill Exploration (TSXV:EAG) signed an exploration agreement for its Windfall Lake project with the Grand Council of the Cree (Eeyou Istchee)/Cree Regional Authority and the Cree First Nation of Waswanipi.

Nortec Minerals (TSXV:NVT) completed a work program at its Seinajoki gold project in Southwestern Finland. The program consisted of bedrock and till geochemical sampling. Results are expected in the next two to three weeks.

Pretium Resources (TSX:PVG) announced that a feasibility study for its underground high-grade gold Brucejack project is making strides with an operating rate of 2,700 tonnes per day. The completed feasibility study for Brucejack is expected by the second quarter of 2013.

Securities Disclosure: I, Karan Kumar, do not hold equity interests in any companies mentioned in this article.