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Heavy Metals: Proactive’s weekly commodities report

Last updated: 17:15 05 Feb 2019 GMT, First published: 17:18 04 Feb 2019 GMT

gold

Summary

Gold is looking increasingly bright in 2019. Last year was a lackluster one for the price of gold, which seesawed as demand from investors ebbed and flowed. Gold prices reached a five-year-low at the end of the summer.

The yellow metal faced significant headwinds for much of 2018, thanks to a range of factors, including a stronger US dollar, the fact that the Federal Reserve continued to hike interest rates, and the Trump administration tax cuts, which helped lift the US economy. This helped move US stock prices higher, until the start of October.

Other contributing factors included heightened geopolitical risks and emerging-markets weakness. Gold’s bottom came in September 2018, when it traded at US$1,182.40 following the release of US economic data that gave the expectation that the Fed would continue with rate hikes. It was gold’s longest monthly losing streak since January 1997.

Future looks promising

But things are looking brighter – a lot brighter -- for gold prices. In the last few weeks, the price of gold nudged above the US$1300 mark, settling at $1,315.50 on Monday.

Gold prices gained about 3% last month, tallying a fourth straight monthly gain – in large part thanks to the Federal Reserve, which left interest rates unchanged in a much-anticipated announcement last week. The Fed said it would be “patient”, which hinted at a momentary pause in monetary tightening – good news for gold prices.

Many analysts and industry watchers expect gold prices to hold at current levels or move higher, as risk appetite decreases and investors reach for safe-haven assets, so 2019 is looking bright.

Gold stocks march higher

The shares of many gold companies are also marching higher. From South Africa to Canada, the US to Australia, stocks of the biggest gold producers in the world have continued to rise in recent weeks on the back of weakness from the Dow Jones Industrial Average.

Barrick Gold (TSE:ABX) (NYSE:GOLD) stock settled at $13.22 on Monday. Barrick was ranked as the biggest gold mining company in the world in 2017 and got even bigger in 2018: the US$18 billion mega-merger of Barrick Gold and Randgold Resources was one of the mining industry's biggest moments in 2018. On Monday, the company announced it had entered into a 50-50 strategic alliance with junior miner Reunion Gold (CVE:RGD) to explore and develop projects in South America. Shares of Reunion Gold jumped 11.8% on Monday at C$0.19.

Goldcorp Inc (TSE:G) saw its shares in Toronto climb 0.9% to $14.55.

SPDR Gold Shares (NYSE:GLD), the largest physically backed gold exchange-traded fund in the world, eased at US$124.14. In the last month, it climbed 2.6%, up 7.5% on the quarter.

South African gold company DRDGold Ltd's (NYSE:DRD) US-listed shares jumped 5.4% to US$2.36 on Monday.

Canadian company Eldorado Gold had a blockbuster week last week after it announced it would resume mining and heap leaching at its Kisladag gold mine in Turkey. Shares were jumped more than 45% in a week and were at C$5.16 on Monday.

Chart of the week: gold prices rallied last month

Spot gold prices rallied in January, on the back of news that the Federal Reserve has left interest rates unchanged -- for now. 

 

News round-up

Jaxon Mining discovers more high-grade gold mineralization at Red Springs

Jaxon Mining Inc (CVE:JAX) (OTCMKTS:JXMNF) revealed it had discovered additional high-grade gold at the Red Springs project in British Columbia. From surface sampling and mapping, up to 55.26 g/t (grams per ton) gold equivalent were found, the Vancouver-based resource firm said in a statement.

Cabral Gold completes first two holes at the Machichie target at Cuiu Cuiu project

Cabral Gold Inc (CVE:CBR) said the first two holes at the Machichie target at its Cuiu Cuiu project in northern Brazil had been completed. The holes traced quartz veins around 50m (meters) vertically below the base of artisanal workings and samples are about to be sent for analysis.

Gold consolidates above US$1,300, and could go higher

The price of gold is now consolidating above the US$1,300 mark, following Friday’s upward move. Plenty of analysts and industry watchers expect it to stay at current levels or even push higher, as the global appetite for risk wanes and investors move once again into safe-haven assets.

Canamex says GoldUSA and SilverUSA tokens being offered to accredited investors

Canamex Gold Corp (CSE:CSQ) (OTCMKTS:CNMXF) said Friday that its GoldUSA and SilverUSA ethereum tokens are now being offered to accredited investors. The amount being targeted by the Company for these offerings is up to US$10 million.

 

Video round-up

Proactive Investors spoke with Ralph Shearing, president and director of Telson Mining, who has 35 years of experience in the business. He gave his thoughts on what happened in 2018 and what might lie ahead for the yellow metal.

 

Contact Katie Lewis at katie@proactiveinvestors.com 

Follow her on Twitter: @kelewis

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