Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Gold futures gave back some of yesterday’s rally amid a light volume trade day and ahead of key important employment reports that are due out later in the week.
In overnight news, the Bank of Australia cut its base lending rate by 25 basis points, surprising many in the market. The Bank of Australia cited the fact that economic growth is due to be weaker than previously expected in 2013, while inflation will remain consistent.
This move is the sixth time in the last two months that a major central bank has enacted or enhanced an easing or stimulus measure to try to ignite economic growth. As far as gold is concerned, the move may have provided a temporary bid, as gold traded up to 1786.6 this morning before selling off later in the session.
It is important to note that China is on a week long holiday and that could be one of the possible reasons for the light volume session.
Heading into tomorrow we have the first reading on private hiring for the September employment by private forecaster ADP.
Thursday Jobless Claims will be released and Friday we have the all-important non- farm payroll number from the Department of Labor. Pre-report guesstimates have the non-farm number at just above 110K, following last month’s disappointing 96K jobs added.
Outside markets such as indices and energies were slightly lower to unchanged as well for most of the session. This may be due to many investors awaiting the jobs data later in the week, along with any outcome out of the EU concerning a bailout of Spain.
This morning the Spanish Prime Minister, Rajoy, poured water on speculation that the country is close to asking for a bailout from the ECB. In my view, the uncertainty of this situation added to the choppy session today and a lower close for gold.
Please call or email me when you have at any time with questions or comments.
Daily Swing #s GCZ2 (10/3)
Resistance#2 – 1792.4
Resistance#1 – 1783.3
Pivot – 1778.1
Support#1 – 1769.4
Support#2 – 1763.8
Sean Lusk
Gold & Precious Metals Analyst
Direct: 312-765-7213
Fax: 312-765-7201
