Gold News

Spot gold prices flat as South African mining strike looms

SPOT GOLD PRICES traded flat during the first-half of London trade on Thursday, holding above Wednesday's late low of $653.50 hit in New York, but failing to break above $656.

The AM Fix came in at $654.50 per ounce, the lowest Fix since Friday afternoon.

"The focus today will remain on US Treasury bond yields as well as the US Dollar," reckons Peter Fertig at Dresdner Kleinwort in Frankfurt.

"The economic data due for release are likely to be more supportive for the US Dollar," he adds – pointing to the Initial Jobless Claims, Leading Indicators and Philly Fed manufacturing index due at 08:30, 10:00 and 12:00 EST respectively.

"That would be negative for gold."

US Treasury prices dipped again Thursday morning, pushing the yield on 10-year notes above 5.15%. Short-dated bonds have outperformed mid-dated Treasuries this week so far, Bloomberg notes.

But even with the US bond market expecting a higher price of money ahead, investors in Asia turned positive on gold overnight, says Bernard Sin, chief gold trader at MKS Finance in Geneva.

Wednesday's 1% drop in the spot gold price brought out buyers in India and Vietnam, he told Reuters earlier.

"Buyers in Vietnam are more concerned about their currency," said Sin. "The lower the gold price goes, the more they buy" – as a hedge against inflation and a store of value.

Overnight in Tokyo gold futures for delivery in April '08 dropped 0.6% to the equivalent of $660.87 per ounce.

Gold priced in Pounds Sterling also slipped in London this morning, failing to hold above £329 per ounce by lunchtime.

Versus the Euro gold prices traded just north of €488 per ounce, little changed from this time last week.

In the gold mining sector meantime, the South African Chamber of Mines responding to wage negotiations with the local mine workers' unions by calling their demands "mind-boggling".

Elize Strydom, the chamber's industrial relations advisor, noted that the National Union of Mineworkers has tabled 60 demands over and above asking for a 15% wage increase.

"We have declared a dispute with the Chamber," said NUM spokesman Lesiba Seshoka. "When we met [Weds] it wasn’t a negotiating session but a complaining session. The Chamber put nothing on the table."

The NUM counts 160,000 workers from South Africa's gold and coal mining industries as its members. South Africa remains the world's largest supplier of new gold-mine supply, according to the latest Yellow Book from Virtual Metals. But production has more than halved over the last decade due to worsening ore grades and rising production costs.

The current threat of strike action could hamper gold-mining production by AngloGold Ashanti, Gold Fields and Harmony amongst others. Strike action two years ago closed South African gold mining production for 5 days.

To read more about gold mining supply in 2007, click here now...

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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