Gold News

Spot gold prices rise as Gold Fields' production slips

Spot gold prices held steady during a quiet session in Asia overnight, before rising 0.2% into the London opening at $675.50 per ounce.

The highest Dollar price since late Tuesday came on news that Gold Fields Ltd of South Africa – the world's fourth largest gold producer – saw output drop 3% between Jan. and March.

Ian Cockerill, CEO of Gold Fields, told reporters that demand from China is "incredibly strong" while bullion supply is dwindling.

Total cash costs of $399 per ounce were nearly 16% higher from a year earlier. Gold Fields' operating margin slipped to 37% from 41% in the previous quarter. (Learn more about the outlook for world gold mining supply here...)

Both China and Japan were closed today for the Golden Week holidays, leaving gold to trade flat against all the major currencies.

The Sterling price of gold opened Europe today at £339 per ounce, 0.2% higher from Wednesday's US close.

Versus the Yen, gold rose nearly 0.4% in the final hour of thin Asian trading to ¥81,300 per ounce.

And against the Euro gold price began the London session at €496.50 per ounce – little changed from one month ago despite a sudden rash of press stories claiming that the single currency is facing collapse thanks to internal, fundamental pressures. (The Euro's predecessor, EMU, broke up in Sept. 1992. Get the full story here...)

"The Euro has looked somewhat toppish for a while now," says Brandon Lloyd in today's Mitsui gold comment.

Noting its 0.9% pullback versus the Dollar since hitting a new all-time high last Friday, "the Euro has been overdue for a cleanout," he says.

"If the Euro breaks down through 1.3550 support then little sits in the way for a correction down to 1.3350. [But] when we look at the recent moves from a macro-perspective however, the US Dollar still remains vulnerable to further selling.

"This remains supportive to gold over the medium term." (The Euro faces many other pressures today – click here to read on...)

Looking at the technical picture for gold today, it's clear that uptrend support from the rise starting in Oct. '06 now sits at $660 per ounce.

Above that, says the latest note from Standard Bank, "key support lies at $665 now that $670 has been broken through.

"With the resumption of full global markets next week, that will provide a clearer picture if this corrective phase has run its course."

For number-crunching gold investors, today will bring initial US jobless claims data plus service-sector sentiment at 10:00 EST.

US factories orders for March came in way ahead of Wall Street expectations yesterday, helping to support the Dollar's bounce against both Euros and gold.

The 3.1% increase – up from 1.4% in Feb. – followed Tuesday's better-than-expected business spending and sentiment data.

But despite this flurry of Fed-positive news, Wall Street still expects to see a sharp drop in non-farm payrolls on Friday – plus a rise in the unemployment rate and a drop in average weekly hours – driven by the ongoing slump in the US mortgage market.

"Eyes are on tomorrow's figure," said Ronald Leung, director of the eponymous gold dealers in Hong Kong, to Reuters earlier.

Citing physical purchases in Asia when gold dipped below $670 overnight, Leung sees gold trading in a tight range between $670 and $674 per ounce in today's session.

If you're thinking about buying gold bullion for your own portfolio, click here to learn more about gold investing today.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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