Gold Prices pulled back from a one-week high above $746 as Wall Street opened for business on Wednesday, closing the London session $4 higher from Tuesday's finish at $743.50 per ounce.

Gold Priced in Euros had earlier hit a new 17-month high, even as the European single currency gained more than a cent in response to the Federal Reserve minutes released yesterday.

Notes from the Fed's Sept. meeting showed a unanimous decision to cut the cost of borrowing Dollars by 0.5%, plus a sharp U-turn in the Fed's "anti-inflation" rhetoric. That sent the US currency reeling, capping its two-week rally from record lows.

The Euro finally took a pause after reaching $1.4160, while the British Pound hit volatility around $2.0450 – more than two cents higher from Tuesday's release of the Fed's minutes.

Gold Priced in British Pounds pulled back from a one-week high of £365.20 per ounce, while the London and European stock markets ended little changed after struggling in negative throughout the day. On Wall Street, the S&P index stood 0.4% lower by lunchtime.

"We've seen traders trying to short the Gold Market on several occasions," said John Reade at UBS in London earlier, "but we're not seeing any long liquidation from Comex [gold futures] speculators, so it's continued to edge higher.

"I expect after trying it a few times they've realized it's not going to happen, and we could see gold push up from here. The market's not particularly liquid right now so it shouldn't take much to push it to the $750 level."

In the Gold Mining Stock sector, meantime, Newmont Mining Corp. – the world's second largest producer – announced a $1.5-billion bid for Miramar Mining Corp. of Vancouver.

Miramar owns the Hope Bay project in Nunavut, "one of the largest undeveloped gold sites in North America," according to the newswires today.

But as Fabrice Taylor points out in the Toronto Globe & Mail, the 10.6 million ounces of gold at Hope Bay are only "indicated and inferred" rather than "probable or proven".

"Put another way," says Taylor, "the purchase price works out to be about $130 an ounce of indicated and inferred resources – and Newmont is paying in cold hard cash, not shares."

Miramar's feasibility study of early 2003, made when the Gold Price was nearer $325 per ounce, projected mining costs of $190 per ounce and required $40 million in capital. "The return would be 136% before tax over the first two years," notes Taylor – and "that, you can be sure, was a rosy forecast.

"Furthermore, the study used an exchange rate of 1.6 [USD/CAD], whereas today we have par. Steel was less than $400 per ton then, oil was $30 per barrel and there were no waiting lists for heavy equipment."

What's more, "there are no real synergies in this deal. Newmont has no particular expertise in northern climates. This is a big, bold and risky bet on a rising gold price, and if gold is going up that much – and if Miramar's ore body is that great – it wouldn't have trouble getting the money to get to production.

"The fundamentals behind gold look good, but the same doesn't necessarily hold for gold shares," Taylor concludes. "By and large, the metal looks better than the paper."

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