Gold prices could rise again this week with data flowing out from the US and Europe highlighting the continuing negative impact of the COVID-19 pandemic.
The news reads like a litany of every gold spruiker’s dream with the US, officially the country with the most infected people, reporting a surge in weekly jobless claims to a record 6.65 million and non-farm payrolls falling by 701,000 in March, the first decline since September 2010.
Meanwhile, the benchmark Purchasing Managers’ Index for the euro zone compiled by IHS Markit dived to a record low of 29.7 in March from 51.6 in February.
Scores below 50 indicate a contraction.
So just what are the key drivers for gold to make gains this week?
Kitco News reported that the US dollar would be the main obstacle to higher gold prices, quoting Mitsubishi analyst Jonathan Butler as saying that while the “economic news doesn’t look too great right now, the dollar is gaining some strength in its own right and relative to other currencies”.
However, Capital Economics assistant commodities economist Kieran Clancy said that as long as there was uncertainty facing the global economy, safe-haven buying would probably be more dominant, which could send gold prices rising.
The last factor that could influence the direction that gold prices take this week is the amount of volatility on the markets.
Too much volatility would impact against gold as highlighted by the mid-March fall in prices.
Spot gold last traded at about $US1,618.50 per ounce, or just over $2,700 in local currency, thanks to the stronger US dollar exchange rate.
Separately, physical gold supply shortages are expected to ease over the coming weeks after three major refineries in Switzerland were granted permission to run at a limited rate after a shutdown of almost two weeks.
In Australia, Bulletin Resources (ASX:BNR) is poised to receive some cash flow through its royalty, profit share interest and joint venture interest in the Geko gold project in the Eastern Goldfields region of Western Australia.
Habrok, which acquired the project from Coolgardie Minerals in February, has restarted mining at the project with first delivery of ore for processing expected in late April 2020.
Bulletin’s royalty entitlement is 10 per cent of the first 25,000 ounces of gold produced, 4 per cent of the next 60,039 ounces and 2 per cent of all production thereafter.
This is reduced by a capped amount of $3.25m at a rate of 3.33 per cent per ounce.
The company also retains a 30 per cent profit share after an initial $9m threshold has been achieved and a 30 per cent joint venture interest on the remainder of the mining tenement.
Meanwhile, initial aircore reconnaissance drilling by Catalyst Metals (ASX:CYL) and Navarre Minerals (ASX:NML) has discovered a new gold zone at their Tandarra project in Victoria.
Highlights from the drilling east of the Tomorrow Trend are 31m grading 1.2 grams per tonne (g/t) gold from a depth of 56m including 1m at 10.2g/t gold and 2m at 1.7g/t gold from 91m.
Catalyst said the new Lawry zone remained open to north and south.
Apollo Consolidated’s (ASX:AOP) drilling has intersected gold at a down-plunge target on the Laura structure within its Lake Rebecca gold project about 150km east-northeast of Kalgoorlie.
The second diamond drill hole of its 2020 program hit 5m at 5.39g/t gold including 2m at 11.69g/t gold with visible mineralisation and an overlying zone of 14m at 1.3g/t gold.
The company plans to maintain exploration operations for as long as possible and is continuing reverse circulation exploration and pre-collar drilling this week.
Drilling is designed to build on the company’s current combined resource of 27.1 million tonnes grading 1.2g/t gold for just over a million ounces of contained gold.