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Gold bugs hoping for good news from the precious metals space will have been disappointed again, as there was no brighter gold price at the end of the rainbow this St. Patrick’s day. Prices dropped to a four-month low, hitting about $1,143.40 per ounce during Tuesday trading hours before settling around $1,149.10, down about half a percent from the previous day’s close.
Update: The Federal Reserve has released its statement following its two-day meeting. It removed a pledge to remain patient, but also left flexibility for the Fed move on the rate increase later in the year rather than in June. As of 2:23 p.m. EST, gold prices were up 1.77 percent to $1,168.50 per ounce.
Gold bugs hoping for good news from the precious metals space will have been disappointed again, as there was no brighter gold price at the end of the rainbow this St. Patrick’s day.
Prices dropped to a four-month low, hitting about $1,143.40 per ounce during Tuesday trading hours before settling around $1,149.10, down about half a percent from the previous day’s close. Spot silver also fell about half a percent to $15.51 per ounce or so, while spot platinum dropped to $1,092.00 per ounce.
Precious metals have been pressured lately by indications that the US Federal Reserve will raise interest rates. That consideration was especially poignant on Tuesday as a two-day policy meeting began for the Fed. According to Reuters, gold’s near-term future could rest on as little as a single word — analysts are expecting policymakers to remove the use of “patient” in reference to an interest rate rise in their statement, putting those at the Fed closer to a increase.
“We do expect gold to fall further if the Fed removes the word ‘patient’ from their statement, and the trading action could be very volatile for investors,” Naeem Aslam, an AvaTrade chief market analyst, told the news outlet.
Gold fell 3 percent, from around $1,200 per ounce to $1,168, following the release of positive US jobs data earlier this month, and prices have not yet recovered. That news gave further strength to the US dollar and to expectations of an interest rate hike. UBS (NYSE:UBS) brought down its one- and three-month price targets for gold, and expects the entire precious metals space to come under pressure as well.
According to the Financial Times, firms such as ABN Amro see the US dollar rising higher this year, leading analysts to expect further downside for the gold price. Still, Capital Economics has been cited as saying that gold is holding up “remarkably well” compared to other times in the past when the US dollar has been strong, and some are expecting increased buying from China and India on the back of lower prices to provide some support.
In any case, gold investors will certainly be watching for what comes of the Federal Reserve’s policy meeting on Wednesday.
Company news
Despite a weaker gold price, some gold-focused companies have still come out with good news recently.
Last Thursday, Canamex Resources (TSXV:CSQ) announced an initial resource estimate for its Bruner gold project in Nevada. The resource estimate currently stands at an indicated 10.3 million metric tons at an average grade of 0.72 g/t gold, with an additional 2.45 million metric tons at an average grade of 0.77 g/t gold in the inferred category.
“This resource estimate and the enhanced understanding gained in its development will be the foundation for a continued exploration program designed to expand in open directions the three deposits identified and to upgrade the inferred resource to the level of indicated resource,” said Canamex President and COO Greg Hahn.
On Monday, Teranga Gold (TSX:TGZ) received environmental approval for its Gora project, a satellite deposit near its Sabodala mine in Senegal. The company expects to be processing ore from the project through its mill by the fourth quarter of 2015.
Also on Monday, Pure Gold Mining (TSX:PGM) intersected high-grade gold mineralization at its Madsen project in Northwest Ontario. Highlights include 39.1 g/t gold over 2.9 meters, including 52.4 g/t gold over 0.7 meters, as well as 37.5 g/t gold over 1.7 meters, including 83.8 g/t gold over 0.7 meters.
Finally, on Tuesday, Source Exploration (TSXV:SOP) announced the start of drilling at its Las Minas property in Mexico. The 2,000-meter drill program is focused on delineating high-grade zones at the property in support of an initial mineral resource estimate.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Canamex Resources and Source Exploration are clients of the Investing News Network. This article is not paid-for content.
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