Gold Rises As Traders Cover Short Positions

A marginal slump in the U.S. dollar (CURRENCY:USD) today handed opportunity to gold shorts to cover their positions. Resultantly, the price of gold logged some gains during Asian trade.

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Gold holds near seven-week low

Gold Futures for June delivery were up 0.30% to $1,227.45. However, gains seemed largely capped as gold hovered near seven-week lows ahead of awaited comments from Federal Reserve President Janet Yellen over the probability of an early rate hike.

Ronald Leung, chief dealer at Lee Cheong Gold Dealers, said that weak dollar momentum and a rally in oil prices helped gold recover a bit. A bigger than anticipated fall in U.S. crude stockpiles drove oil north of $50, acting as a catalyst for gold. However, any indication from the Fed Chair about rate hikes could disrupt the outlook for gold.

Kinross has a contingency plan

Meanwhile, a Reuters report highlighted that Kinross Gold Corporation (NYSE:KGC) continues its operation at Tasiast mine in Mauritania despite a strike called by workers. The company’s representative confirmed that management has a contingency plan in place to counter possible impacts of the strike. Workers at the mine went on strike starting Tuesday. However, the event is unlikely to impact Kinross’ expansion plans at the site. Kinross had set aside funds worth $300 million in March towards the first-phase expansion of Tasiast mine.

Sibanye Gold Ltd (ADR) (NYSE:SBGL) CEO Neal Froneman expressed the company’s intention to acquire gold assets by the end of this year. However, a sharp spike in gold prices is posing challenges from an acquisition perspective, said Froneman. It is noteworthy that Froneman successfully turned around three gold assets located in Sourth Africa, post its spinoff from Gold Fields Limited (ADR) (NYSE:GFI).

New Gold Inc. (NYSEMKT:NGD) received a downgrade from Dundee, which has now assigned a ‘sell’ rating to the company from earlier ‘Neutal’ outlook.

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