The SPDR Gold Trust (ETF) (NYSEARCA:GLD) resisted heavy selling yesterday to trade higher but gave up its rally in the afterhours as the dollar and equity markets strongly revived. Gold Futures for April Delivery are trading down by 0.65% to 1,264.50.
Gold Demand Fades
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The yellow metal traded steadily near its 13-month highs after the European Central Bank announced deep interest rate cuts which boosted the demand for inflation assets. However, further indication by the Central Bank that the possibility of any more rate cut is faint in the near future had extinguished some buying interest in the commodity.
The rapid change in outlook on gold overnight signifies that commodity prices are majorly influenced by the greenback and change in inflation expectations. Analysts hold the opinion that cuts in interest rates alone do not dictate gold prices, which seem to be driven by factors other than interest rates. Capital Economics has projected $1,350 per ounce as the target price for gold by the end of 2016.
Newmont sells share in Australian Miner
Among the gold mining companies, Desjardins has initiated coverage on Goldcorp Inc. (USA) (NYSE:GG). The research firm has given a ‘Hold’ rating to the company.
Newmont Mining Corp (NYSE:NEM), one of the major gold miners based in the U.S., has announced that it has sold its share in Australian miner Regis Resources. The sale has been made to institutional investors for $182 million. The company will sell its 19.45% share in the miner in full, which will help it to gain the maximum advantage of the recent surge in gold prices. It is to be noted that Regis’ share prices have grown two-fold over the last eight months as a result of the rally in gold prices, a lower Australian dollar and energy prices.
Meanwhile, Barrick Gold Corporation (USA) (NYSE:ABX) has reassured its partners that it is looking into the matter of the Veladero mine spill matter that occurred last year in September in Argentina. Nearly nine of the company’s employees are facing accusations in connection with the spill.