Gold sinks below $US1,900/oz, has the rally ended?
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With gold prices slumping below the $US1,900 ($2,686) an ounce mark this week, punters are no doubt wondering if this is the end of the precious metal’s remarkable run or if it is just taking a little break before running again.
The fall can be traced directly to a strengthening US dollar that has gained on fading hopes of more stimulus programs along with the stagnant economy turning the focus away from inflation.
Central banks have also stopped buying gold as the price had become too high for them.
“The firm US dollar is like a millstone around the neck of precious metals prices, and is putting pressure on gold despite increased risk aversion,” Bloomberg quoted Commerzbank analyst Carsten Fritsch as saying.
However, he noted that US Fed policy will remain expansionary for years, which meant that the dollar’s strength is unlikely to last.
ByteTree Asset Management chief investment officer Charlie Morris told Kitco News there is plenty of upside potential to gold and stood by his May forecast that it could push to $US7,000/oz by the next decade.
He noted that low interest rates, coupled with rising inflation pressures, will continue to push gold prices higher.
For Australian miners, the fall in gold prices has been alleviated by the strengthening US dollar against the Aussie, leaving the local price of gold well above the $2,600/oz mark.
Focus Minerals’ (ASX:FML) plan to kick off mining operations at its Laverton gold project in Western Australia have been boosted by a 60 per cent increase in open pit resources at the Karridale deposit to 1.19 million ounces.
The resource was increased following a full geological relogging and model rebuild that has also resulted in exploration targets being revised.
A pre-feasibility study is currently underway into Stage 1 mining operations at the project, of which Karridale is a key asset.
Gold was discovered in the area in 1897 and Karridale was historically mined in places to 40m below surface as part of the Burtville mining centre.
The most extensive historic workings were the Karridale/Boomerang Mines, where between 1900 and 1905, 1,628 tonnes of ore were mined to produce 4,882oz of gold.
Vango Mining’s (ASX:VAN) has made a high-grade lode discovery at the K1 prospect with drilling returning results of up to 6m at 8.66g/t gold including 2m at 23.8g/t gold from a depth of 128m.
Drilling has also returned significant intersections from three key lode extensions at the PHB-1 target such as 3m at 5.93g/t gold, 6m at 3.68g/t gold and 4m at 3.83g/t gold.
Results of the broad spaced extension drilling indicates the potential to link high-grade gold mineralisation from PHB-1 to the K1 prospect over a 3km strike length.
The company plans to fast-track drilling to define high-grade resource extensions and test the larger scale potential of the PHB Corridor.
Drilling has now moved to the Trident Corridor, testing extensions to the Mareast and Mars/Marwest high-grade zones, including a potential link to the Trident resource
Meanwhile, Tietto Minerals (ASX:TIE) has highlighted the potential of the high-grade Abujar‐Gludehi deposit within its 2.2 million ounce Abujar gold project in Côte d’Ivoire with drilling returning a 1m zone grading 134.48g/t gold within a broader 4m intersection at 35.08g/t gold.
The company expects to soon receive all assays from its diamond drilling campaign of more than 61,000m at Abujar.
These results will be included in its upcoming resource update, which is on track for release in mid-October.
It is also planning aggressive drilling programs throughout 2021 using its fleet of diamond rigs to deliver rapid resource growth.