Abitibi Metals boosts resource by 62% at B26 polymetallic deposit in Quebec
Indicated resources increased to 11.3 million tonnes from 6.9 Mt.
Gold prices fell more than 1% on Monday as the metal was caught in a global, wider market sell-off driven by mounting economic concerns.
Spot gold fell as much as 3.2% to $2,365.55 per ounce, the biggest single-day drop since early June. By 12:55 p.m. ET, it had recovered half of the loss to $2,403.37 per ounce.
US gold futures were also lower by 1.0% at $2,445.10 per ounce in New York, but maintained above the $2,400 level throughout the session.
Despite Monday’s sharp drop, gold is still up by about 18% year to date. It hit an all-time high in July, aided by central bank buying and Asian consumers. Last week, it crossed the $2,500 mark for the first time ever.
Expectations of rate cuts by the US Federal Reserve, along with rising geopolitical tensions in the Middle East, have provided strong support for bullion, which is often considered a safe haven during times of uncertainty.
But those bullish factors were overshadowed on Monday by pressure on positions from the global stock market selloff triggered by fears of the US tipping into recession following weak economic data last week.
“Margin calls ahead of the New York opening have forced traders to liquidate winning positions in gold to cover their losses on stocks,” said Adrian Ash, director of research at BullionVault, in a Bloomberg note.
In a stock market crash it’s common for gold to drop as equities plunge, “but it falls less and from higher ground before finding its floor sooner,” he explained.
However, analysts believe the precious metal could regain its footing, given the persistent economic and political uncertainties looking ahead, and also on expectations of interest rate cuts, which should bode well for the zero-yield bullion.
“Virtually every time there is marked equities weakness, investors who hold gold as a risk hedge will liquidate part of their holdings to raise liquidity against any potential margin calls,” said Rhona O’Connell, an analyst at StoneX Financial.
“When the dust settles, they almost invariably buy it back,” she added.
(With files from Bloomberg)
