Gold hovers just below $US1,900/oz, capped by year-end profit-taking
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Gold was trading at $US1,867 per ounce ($2,477/oz) Wednesday and is $US165 off its August peak after the US Congress passed a smaller than expected economic stimulus package.
Progress in rolling out the COVID-19 vaccine in the US and a small uptick in the US dollar index is also providing some headwinds for gold.
“The prospects of more stimulus have been driving gold higher, but today’s short-term dollar surge is disrupting that thesis,” Oanda market analyst, Ed Moya, told Investing.com.
Moya added that the gold market had already priced in the passing of the $US900bn economic relief package, some of which includes previously pledged funds.
“Gold’s bullish trend is still intact but could still be vulnerable if the dollar comeback lasts a couple of days,” said Moya.
The price of gold hit a five-week high earlier this week at $US1,895 per ounce ($2,494/oz) on a low interest rate environment and US dollar weakness.
US lawmakers were originally targeting a $US2 trillion package of economic measures for American workers and businesses under the Coronavirus Aid Relief and Economic Security Act (CARES Act).
Looking further ahead into next year, gold’s fundamentals still appear bullish.
“Price risks are skewed to the upside for gold as we enter 2021, given our expectations for the dollar to weaken and monetary policy to remain accommodative, but year-end profit taking may cap the gains in the near term,” Standard Chartered gold analyst, Suki Cooper, told Reuters.
Adding to the gold market’s brittle sentiment is the unchecked outbreak in Britain of a new variant of COVID-19 and jitters over the progress of Brexit talks between London and Brussels.
Silver has stabilised at $US25.20 per ounce ($33.50/oz) after its August high of $US29.37/oz.
Shandong Gold Mining has lifted its offer price to $1.075 per share that values Cardinal Resources at around $600m.
The fresh takeover offer is conditional on the Chinese gold miner acquiring at least 30 per cent of Cardinal Resources’ shares by December 31.
And, rival bidder Nordgold not extending its takeover offer for the ASX gold company.
Shandong Gold Mining currently has 12.9 per cent of Cardinal Resources’ shares, and shareholders holding an additional 22.8 per cent of shares have pledged to accept its offer.
Nordgold, a Russian gold producer with gold mining interests in West Africa, has given Cardinal Resources shareholders until Wednesday’s ASX market close to accept its offer.
Nordgold’s offer price for Cardinal Resources is $1.05 per share, plus an additional 2.5c per share in the event that some price increase conditions for the ASX explorer are satisfied.
Cardinal Resources’ board of directors has told the company’s shareholders not to take any action regarding Nordgold’s offer which was increased from $1 per share in mid-December.
The ASX gold explorer’s main asset is its Namdini gold project in the West African country of Ghana.
New Zealand-focused gold explorer Siren Gold (ASX:SNG) has intercepted a 6m quartz reef with visible gold at its Big River project following exploration drilling.
The gold discovery was made down plunge from an OceanaGold drillhole that had intersected 6.6m at 21.4 grams per tonne on New Zealand’s South Island.
Eight drill holes were completed since the current round of drilling started in October.
The company’s first drill holes were made 150m west of the historic Big River gold mine, and intersected a 5m mineralised zone containing quartz veins and breccia along a 100m strike.
The Big River mine has historic gold production of 136,000 ounces at 34.1 g/t of gold.