Evolution Mining climbs to 4-year high on upbeat Q2 production, bullion prices
The company reported a quarterly group gold production of 194,793 ounces, compared with 161,073 ounces a year earlier.
On Wednesday, gold dropped to the lowest level since March 2010 as negative sentiment overwhelms the sector and analysts predict a return to triple digits for the metal.
Futures contracts in New York with August delivery dates were priced as low as $1,087.10 an ounce down more than $15 or over 1% from yesterday’s close.
It’s the tenth straight day of losses and the 6% decline over the period is the worst losing streak for gold since September 1996 when gold was worth around $380 an ounce.
Last week large gold futures investors such as hedge funds slashed long positions – bets on a rising price – to the lowest since 2006 when the Commodity Futures Trading Commission first started to collect the data.
At the same time speculators’ short positions – bets that gold could be bought cheaper in the future – are at record highs.
The recent weakness in gold follows comments from the US Federal Reserve that the central bank is on course to raise interest rates before the end of the year for the first time since 2006.
Rising real interest rates raises the opportunity costs of holding gold because the metal provides no yield and therefore the price should decline.
Higher rates also boost the value of the dollar which usually move in the opposite direction of the gold price.
Against major currencies the greenback is 20.7% stronger than a year ago while gold has declined 17% compared to this time last year.
Chief commodity strategist at investment bank Goldman Sachs, Jeffrey Currie, who has been bearish on gold since 2012, tells Bloomberg that gold is heading below $1,000 an ounce.
Currie argued that gold is essentially hedge against a debasement in the US dollar and rising inflation. Both these factors have faded and can no longer support the gold price because “the demand to use gold as a diversifying asset against the US dollar becomes less and less important”:
“In longer term, we definitely like playing this market on the short side,” Currie said. “We think we are in a structural bear market, not only in gold, but across the commodity complex, as the individual commodity stories are reinforcing to one another, creating a negative feedback loop.”
Currie is not the only market observer predicting further losses in gold.
In the annual gold forecast survey by the London Bullion Market Association of the 35 analysts polled, five predicted a dip below $1,000 in 2015.
Adam Myers of Credit Agricole was the most bearish with $950 as an average and a low point of $880.
Image by Perpetual Tourist
6 Comments
Gene Byrge
All commodities pricing is set by supply and demand. All the ranting and raving and gnashing of teeth is only hyperbole. The product is worth what someone is willing to pay and that is all it ever will be, except in cases of massive fraud by banks, governments and other powerful groups/institutions. Stop trying to predict the weather.
Gene Byrge
Are you from Earth? I had thought I was the only one left. Welcome to the human race.
Gene Byrge
You can fool all of the people some of the time. These bad boys are in the very high percentiles. Darn it!
rayban
Supply and demand is ruled by prices and the US Dollarado is in charge of that a lot lately . Gold is gonna be cheap if we see 1.05 US Dollar and USA exports are gone with the wind . If the FED prints , own Gold ?
Gene Byrge
Ride the bears DOWN and then ride the bulls UP and repeat until you go broke subsidizing foolish governing bodies idiotic manuevers. Then jump out the windows, or go get jobs in Calif. where the minimum wage will soon be enough to pay the rent.
Gene Byrge
I mine Gold. How heartening to see that my (U.S.) government is openly conspiring with the Chinese to drive down the price of my toil. God Bless you all (or Not).