Precious metals benefitted from Friday’s US jobs report, which revealed a steeper than expected reduction of 131,000 instead of an expected 60,000-70,000 decline. June’s 125,000 decline was revised upwards to 221,000, while the private sector was shown to have created 71,000 jobs compared to 31,000 in June. The unemployment rate stayed at 9.5%, while analysts expected a rise to 9.6%.
The safe-haven gold surged past US$1,210/oz before settling at US$1,205/oz just a little over a week after falling below US$1,160/oz.
The yellow metal’s rally US$1,180/oz to US$1,190/oz early in the week was fuelled by demand from bargain hunters, which were buying bullion after the prices dropped well below US$1,200/oz, and Indian jewellers, which were buying gold ahead of the festival season in that country.
Bank UBS (NYSE:UBS) said that its gold sales to India reached the highest level in 20 months.
The economic data released in the previous week suggested there could be further setbacks to the economic recovery to boost gold’s safe haven appeal. While the University of Michigan consumer confidence index was revised upwards to 67.8 from a previous reading of 66.5 for July and the Chicago PMI (purchasing managers index) beat expectations with an improvement from 59.1 to 62.3 in July, Q2 US GDP failed to match projections with a decline to 2.4% instead of the projected 2.5% and New York ISM index fell to 58.4 in July from 69.3 in June.
Gold got a boost later in the week when China’s People’s Bank said it would allow more banks to import and export gold, improving the outlook for gold demand. China has repeatedly said it would not use gold as a reserve asset due to its high volatility.
Gold demand has increased during H1 in China after the government introduced a series of monetary tightening measures to prevent the booming economy from overheating, prompting investors to put more money into safe haven assets.
At the end of the week, Chief Executive of FTSE 100 gold producer Randgold Resources (LON:RRS) Mark Bristow has started that South Africa has “run out of gold” and was “too deep to mine,” while gold itself was “damn scarce” and could be worth US$1,500/oz as soon as in 2011 as gold market was “ex-growth.” Bristow also said that he expected a “big correction” again next year.
Gold climbed to US$1,205/oz, while silver and platinum improved to US$18.46/oz and US$1,571/oz.
Major mining stocks were mixed with gold and silver producers making gains, while platinum miners were in decline. Gold miner Randgold Resources (LON:RRS) slipped from 5,730 pence to 5,410 pence and silver miner Fresnillo (LON:FRES) climbed from 1,031 pence to 1,057 pence, while platinum miner Lonmin (LON:LMI) slid from 1,570 pence to 1,557 pence.
Gold producer Petropavlovsk (LON:POG) rallied from 1,010 pence to 1,079 pence. Fellow midcap, silver producer Hochschild Mining (LON:HOC) also did well, advancing from 289 pence to 320 pence.
Aquarius Platinum (LON:AQP) declined from 274 pence to 268 pence.
Small Cap News
Turkey focused gold miner Ariana Resources (LON:AAU) said the latest drilling results from the Banu and Derya veins at its Red Rabbit project in Turkey “confirmed the integrity” of the resource at the Kiziltepe prospect with mineralised quartz intersected in every hole for a flawless “hit-rate”.
Herencia Resources (LON:HER) this morning said its latest drilling programme had uncovered a high grade extension to the Cathedral vein at its Paguanta zinc-silver-lead project in northern Chile.
Connemara Mining’s (LON:CON) latest drilling update on the Stonepark project in Limerick reveals it may be part of a ‘world-class’ zinc find, according to research carried out by Optiva Securities.
West Africa focused uranium explorer Forte Energy (LON:FTE. ASX:FTE) updated on its activities in the past quarter, which saw the completion of the maiden JORC resource estimate for its flagship Bir En Nar uranium project in Mauritania, which could soon see a substantial increase.
South American based explorer Mariana Resources (LON:MARL) has signed a drilling contract with Argentine company Eco Minera covering a minimum 10,000 metres at its Las Calandrias gold-silver project in the Santa Cruz province. The drilling programme is expected to take four months, starting in early September 2010, with an aim to produce a maiden resource estimate at the Calandria Sur target.
South American gold producer and explorer Orosur Mining Inc (TSX-V: OMI, LON: OMI) has entered into a definitive option and joint venture agreement with Gladiator Resources Ltd (ASX:GLA) which provides GLA the right to earn up to an 80 percent interest in Orosur’s iron ore, manganese ore and base metals prospects in the Isla Cristalina Belt in Uruguay.
Atlantic Coal (LON:ATC) has raised £1.7m through an equity placing with certain new and existing shareholders. The proceeds will be used to complete the last stage of infrastructure works at the company's primary asset, the Stockton Colliery in Pennsylvania.
Nyota Minerals (LON:NYO, ASX:NYO) has said that latest reverse circulation and diamond drilling results from its Tulu Kapi gold project oin Ethiopia have been positive, allowing it to proceed with increasing the inferred resource and establishing an indicated resource at the project.
Kryso Resources (LON:KYS) has appointed senior mining engineer Andre Gaston as its chief operating officer (COO) to manage the ongoing exploration programme at the Pakrut gold project in Tajikistan and finalize the project bankable feasibility study and prepare the mine for production.
Coal of Africa (LON:CZA) told investors that appeals against the New Order Mining Right (NOMR) awarded to the company’s wholly-owned subsidiary Limpopo Coal Co, for the Vele Colliery in South Africa, “have no basis or legal merit whatsoever”.
Nyota Minerals (LON:NYO, ASX:NYO) has made a number of managerial appointments, with current COO Terry Tucker being promoted to the board of directors, and the company having hired a new in-country manager for Ethiopia.
Turkey and Ethiopia operating gold miner Stratex International (LON:STI) reported on its progress during the six months to 30 June, which put the company closer to production with all of its projects undergoing extensive development.
Shanta Gold (LON:SHG) announced its decision to begin mine construction at the Chunya gold project in southern Tanzania, subject to the receipt of a mining licence. The decision follows the results of July’s positive feasibility study, which justified the construction of an open-pit mine producing 28,400oz of gold annually over an 11-year mine life.
Medusa Mining (ASX:MML, LON:MML, TSX:MLL) has said that the new estimate for its Co-O gold mine in the Philippines put the probable reserve at 505,000 oz (ounces) contained in 1.46 Mt (million tonnes) grading 10.7 g/t gold.
Large and Mid Cap News
Transnational miner Rio Tinto (LON:RIO, NYSE:RTP, ASX:RIO), the world's No 2 name in seaborne iron ore, has upped the ante in West Africa's iron ore race, the biggest in global mining, by announcing a further USD 170m investment in Guinea's Simandou, following USD 650m investment to date. After discovering Simandou in 2004, the iron ore system, 95% claimed by Rio Tinto, rapidly developed into one of the world's biggest mining hits.
Xstrata Resources (LON:XTA) and Minco (LON:MIO) have reported an upgraded resource estimate for the Pallas Green zinc project in the Republic of Ireland. Through its work on the joint venture property, Xstrata has now increased the inferred resource to 24.1 million tonnes at average grades of 7.85% zinc and 1.35% lead.
Randgold Resources's (LON:RRS, NYSE:GOLD) second quarter results reflect the exceptionally strong gold market, as the FTSE100 gold miner almost doubled year-on-year Q2 profits, up 92%. However these apparently buoyant headline numbers are heavily supported by the surging price of the yellow metal, rather than its operating performance.
Mining major Rio Tinto (LON:RIO, NYSE:RTP, ASX:RIO) said it is turning the investment taps on as it posted record interim results. A rebound in metals prices and voracious demand from China saw underlying profits pushed to US$5.8 billion, up from US$2.6 billion a year earlier.
Ferrexpo (LON:FXPO), the Swiss-based Ukrainian miner, said demand for iron pellets outstripped supply as weighed in with a bumper set of interim figures. However the group complained of a "lack of pricing clarity" following a change by the industry’s super-majors to quarterly iron ore pricing rounds from annual contracts.