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Top Stories This Week: Gold Price Reacts to Fear, Uranium Sector Dissects Cameco Results
Various factors were working in gold's favor this week, including tensions in the Middle East, comments from the US Federal Reserve and the latest US jobs report.
The gold price was on the rise this week, briefly passing US$2,500 per ounce before ending lower.
The US Federal Reserve's latest meeting provided a boost midway through the week. As was widely expected, the central bank left interest rates unchanged at 5.25 to 5.5 percent, but it's indicated a cut may come as early as September.
In a press conference after the gathering, Chair Jerome Powell said a reduction "could be on the table" if inflation continues to fall. The Fed would like to see an inflation rate of 2 percent, and its preferred gauge, the personal consumption expenditures price index, was up 2.5 percent year-on-year in June. Month-on-month it rose 0.1 percent.
Tensions in the Middle East also supported gold this week. Two assassinations have created concerns that conflict in the region is ramping up to more dangerous levels, prompting investors to turn to the yellow metal as a safe-haven asset.
As these events were unfolding, Will Rhind, CEO of GraniteShares, told the Investing News Network that fear, which has been missing from the market so far this year, is now starting to rear its head.
"That to me has been the big change that has put us to these new levels in gold," he said.
The yellow metal's move past US$2,500 came on Friday (August 2) after a lackluster jobs report out of the US. The Department of Labor said non-farm payrolls rose by 114,000 jobs in July, much less than the 175,000 average forecast by economists polled by Reuters. Meanwhile, the unemployment rate rose to a three year high of 4.3 percent.
Gold later fell to close the week just above the US$2,440 level.
Bullet briefing — BHP, Lundin to buy Filo, Cameco releases Q2 results
BHP, Lundin Mining to acquire Filo
M&A activity was in the air this week as BHP (ASX:BHP,LSE:BHP,NYSE:BHP) and Lundin Mining (TSX:LUN,OTC Pink:LUNMF) teamed up to acquire Filo (TSX:FIL,OTCQX:FLMMF) in a C$4.5 billion agreement.
Under the deal, BHP and Lundin will form a 50/50 joint venture that will include the Filo del Sol copper-gold-silver project, owned by Filo, and Lundin's Josemaria copper-gold project. Both are located in Argentina near the Chilean border.
In the wake of the announcement, Rio Tinto's (ASX:RIO,LSE:RIO,NYSE:RIO) CEO said in a media call that the company would consider making a large copper acquisition, but is wary of overpaying in today's hot market.
"We are constantly looking for other opportunities. On the other hand, it is a bit of a heated market, so that's not an easy market to just buy yourself into. While we are looking we are also saying, we are not prepared to pay those prices" — Jakob Stausholm, Rio Tinto
Cameco releases “strong” Q2 results
Major uranium miner Cameco (TSX:CCO,NYSE:CCJ) released its second quarter results this week, describing its operational performance as "strong" and saying its financial results are in line with its outlook for 2024.
The company reported net Q2 earnings of C$36 million, adjusted net earnings of C$62 million and adjusted EBITDA of C$337 million. Meanwhile, Cameco delivered 6.2 million pounds during the quarter and 13.5 million pounds year-to-date. Cameco still plans to deliver 32 million to 34 million pounds for the full year.
Perhaps more anticipated than Cameco's results was commentary on its operations in Kazakhstan and outlook for the sector. Output from the company's Inkai joint venture with Kazatomprom was lower in both Q2 and H1 due to challenges obtaining sulfuric acid, with 2024 output of 8.3 million pounds said to be "tentative."
Cameco also commented on amendments to Kazakhstan's tax code, saying its preliminary conclusions show that it would push production costs in the country up to levels seen at its operations in Northern Saskatchewan.
"The days of easy and cheap pounds out of Central Asia are essentially over. The global cost curve is going up, and we are going to need to see sustained higher prices" — Grant Isaac, Cameco
Although the company's outlook on the uranium market remains strong, investors didn't respond favorably to this week's release, with Cameco's share price closing the period down close to 16 percent.
It wasn't helped by news that Kazatomprom has increased its 2024 production guidance by 5 percent.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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With an eye for detail and over a decade of experience covering the mining and metals sector, Charlotte is passionate about bringing investors accurate and insightful information that can help them make informed decisions.
She leads the Investing News Network's video and event coverage, and guides a team of writers reporting on niche investment markets.
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With an eye for detail and over a decade of experience covering the mining and metals sector, Charlotte is passionate about bringing investors accurate and insightful information that can help them make informed decisions.
She leads the Investing News Network's video and event coverage, and guides a team of writers reporting on niche investment markets.
Learn about our editorial policies.