Gold Bounces on Ukraine Worries

Thursday April 24, 2014, 5:15pm PDT
By Vivien Diniz - Exclusive to Gold Investing News

Gold has swung back after sustaining a two-and-a-half-month low earlier this week. Safe-haven demand was back in force on Thursday as tensions between Ukraine and Russia escalated. Specifically, Russian President Vladimir Putin warned Ukraine not to continue its anti-separatist offensive after government troops killed five rebels, prompting the Russian military to begin new drills, Bloomberg reported.

The yellow metal dipped down to its lowest price since February on Tuesday, trading at $1,277.10 per ounce. By mid-week, gold was trading flat, with the spot price faring slightly better at $1,284.49; however, it was held back by equities, which put a damper on safe-haven appeal, and weak investor appetite. Also keeping metals prices down was data from the US indicating that home prices climbed in February; home sales were more robust than expected as well.

Tokyo-based Yuichi Ikemizu, branch manager at Standard Bank, commented on this week’s gold performance, explaining that “[t]there is support at $1,275. But if we break that level, we are going to fall to $1,250.” Ikemizu went on to explain that the current sentiment surrounding the yellow metal is quite bullish, with no physical buyers at the sub-$1,300 level.

Gold definitely tested the $1,300 mark on Thursday, hitting a high of $1,299.90. Ultimately, the yellow metal closed at $1,292.95 that day.

SPRD Gold Trust ETF not looking so hot

According to BusinessDay Live, the world’s largest exchange-traded fund (ETF), the SPDR Gold Trust (ARCA:GLD), hasn’t been doing too well in recent days, with sharp outflows weighing down prices. Indeed, last week alone, the fund saw an outflow of 9.3 tonnes, wiping any gains made so far this year. The fund has dropped 7 percent in the last six weeks.

Goldcorp drops Osisko bid

This week, the saga between Vancouver-based Goldcorp (TSX:G,NYSE:GG) and Montreal-based Osisko (TSX:OSK) came to a close as Goldcorp threw in the towel on its bid for the mid-tier miner.

Goldcorp’s CEO, Chuck Jeannes, explained that the company made a decision to remain disciplined with respect to the bid, emphasizing that the decision not to pursue the transaction following the $3.9-billion bid by Yamana Gold (TSX:YRI) and Agnico Eagle (TSX:AEM) was in line with that decision.

Company news

On Thursday, Sandstorm Gold (TSX:SSL,NYSEMKT:SAND) announced a US$10-million loan to Luna Gold (TSX:LGC). Luna Gold has drawn on the full amount of the loan and intends to use the funds for a brownfield exploration — drilling — program that it plans to start in the latter half of 2014.

Meanwhile, Cayden Resources (TSXV:CYD) reported drill results for the first seven holes at the Pena de Oro target at the El Barqueno gold property in Jalisco State, Mexico. Highlights from the program include 27 meters of 4.46 grams per tonne (g/t) gold from surface in hole 43, along with 12 meters of 4.77 g/t gold in hole 47. All seven holes in the program hit significant gold intercepts.

Castle Mountain Mining (TSXV:CMM) released a PEA on Thursday for the Castle Mountain mine in California. It showcases a production plan of 176,000 ounces of gold over a period of more than 17 years. The company plans to start construction in 2015; it also expects to acquire the remainder of its permits alongside its feasibility study.

Richmont Mines (TSX:RIC,NYSEMKT:RIC) made some progress with its Island Gold Deep. The company accessed the deep C Zone for the first time and confirmed the continuity and grade of the deposit.

According to Paul Carmel, CEO of Richmont, “[s]o far we have three levels opened up at Island Gold Deep, with a fourth (610 metre) to be excavated very shortly. The ramp will reach our targeted 635 metre level before year-end and may potentially be continued to the 660 metre level depending on the availability of jumbo crews.”

Carmel added that the company is “already beginning to lay the groundwork for extraction of the first long-hole stope from Island Gold Deep later in the year, yielding further geotechnical data before beginning the process of establishing reserves. We are delighted with the progress we are making at Island Gold Deep as it continues to transform the Island Gold Mine into a long-life, low-cost, cornerstone asset for Richmont.”

Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.