Gold Futures Hit Four-week High; Bad News Baked into Price?

COMEX gold futures for December delivery hit a four-week high of $1,156.40 per ounce on Thursday. That’s up significantly from last week’s high of $1,141.10, reached after the US Federal Reserve decided not to raise interest rates.
Explaining what drove Thursday’s impressive increase, Kitco‘s Jim Wyckoff cites “strong short covering in the futures market, bargain hunting in the cash market, and some fresh safe-haven demand” as the factors responsible. Expanding on that last point, Myra P. Saefong of MarketWatch notes that the US dollar’s weakness against most currency rivals, plus global stock market declines, increased the yellow metal’s safe-haven appeal.
While that price increase is certainly positive for gold bugs, it may not last. Saefong notes that Fed Chair Janet Yellen will be speaking late Thursday about inflation. As Colin Cieszynski, chief market strategist at CMC Markets, told the news outlet, that “could attract a lot of attention from traders looking for hints of when the Fed could start raising interest rates.”
However, it’s worth noting that not everyone sees the Fed and its anticipated interest rate rise as crucial to the gold price outlook — while initially the expectation was that a hike would likely hurt the metal’s price, as the rise has been pushed further out, the likelihood of it having a big impact on the gold price has lessened. That’s a perspective that’s been endorsed by UBS (NYSE:UBS) — in a recent note to clients, the firm said, “we think that the bulk of the adjustment to the current and expected macro environment has already taken place.”
In any case, it will certainly be interesting to see whether gold can maintain the gains it’s made recently. As of 4:00 p.m. EST on Thursday, the spot gold price was sitting at $1,152.80.

Company news

Those watching the world’s major gold miners saw some excitement this week when news surfaced that Barrick Gold (TSX:ABX,NYSE:ABX) has seen “strong interest” in a package of six gold assets in Nevada and Montana that it’s looking to sell. A senior executive at the company told Reuters that he sees a deal closing by the end of 2015.
An anonymous investment banking source told the news outlet that likely buyers are Newmont Mining (NYSE:NEM) and Kinross Gold (TSX:K,NYSE:KGC). However, Newmont soon came forward to say that while it’s potentially interested in buying out Barrick’s 50-percent stake in the Western Australia-based Kalgoorlie Super Pit, it’s not looking to purchase the assets Barrick currently has up for sale.
“Of their current portfolio in Nevada, we don’t have any interest in the assets that they’re looking to sell,” CEO Gary Goldberg is quoted as saying in a Bloomberg article.
As gold-focused companies large and small continue to cut costs and hone their focus on core assets, it will be interesting to see which company — if any — steps forward to acquire Barrick’s package of US assets.

Junior company news

Analyst favorite Pretium Resources (TSX:PVG,NYSE:PVG) announced Monday that it’s closed a US$540-million construction financing package for its British Columbia-based Brucejack project. The company hopes to reach commercial production at Brucejack in 2017.
The same day, the company released initial results from grassroots drilling currently taking place in the Flow Dome zone at Brucejack. The work suggests a new stockwork zone or an extension of the Valley of Kings deposit.
Also on Monday, Scorpio Gold (TSXV:SGN) released further results from 2015 expansion drilling at the Brodie deposit target area, located at its Nevada-based Mineral Ridge project. Highlights include hole MR151658, which intercepted 12.55 g/t gold over 3.05 meters, and hole MR151629, which intercepted 5.86 g/t gold over 1.52 meters.

Avrupa Minerals (TSXV:AVU) also put out drill results on Monday. Its were from the Peshter gossan target at its Slivovo project in Kosovo, with highlights including hole SLV025, which intercepted 11.59 g/t gold and 10.32 g/t silver over 24 meters. In total, 44 holes covering 4,927 meters have been completed at Slivovo, and the current drill program there will finish after two more holes are completed.
Tuesday, Calibre Mining (TSXV:CXB) revealed final results from an 11-hole drill program at its Montes de Oro gold project in Nicaragua. Highlights from the Phase I program include hole MD15-010, which intercepted 2.6 g/t gold over 12.97 meters; that includes 4.58 meters grading 6.47 g/t gold.
President and CEO Greg Smith said, “[r]esults from the 2015 drilling program at Montes de Oro have outlined a broad zone of gold mineralization locally containing high grade gold associated with zones of massive sulphide mineralization as well as wide zones of disseminated sulphide mineralization.”
Kaminak Gold (TSXV:KAM), another analyst favorite, published an updated mineral resource estimate for its Yukon-based Coffee gold project on Wednesday. The company has increased the grade of the indicated resource by 8 percent, and the grade of the inferred resource by 12 percent.
Finally, Thursday saw Kapuskasking Gold (TSXV:KAP) sign a memorandum of understanding with four First Nations regarding its Ontario-based gold projects. At the same time, it received exploration permits for the projects from Ontario’s Ministry of Northern Development and Mines.
 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Avrupa Minerals, Calibre Mining and Kapuskasing Gold are clients of the Investing News Network. This article is not paid-for content.
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