Peru’s small miners block highways, camp outside Congress demanding registry extension
Analyst says that there are strong competing interests between Congress and small-scale miners that could escalate.
The gold price firmed again on on Tuesday, consolidating above $1,300 an ounce in early New York trade.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery in early trade exchanged hands for $1,312 an ounce, up more than $6 from Monday’s trading session.
On Friday gold fell below the psychologically important $1,300 an ounce level after strong economic data and a strengthening US dollar outweighed safe haven buying on geopolitical concerns.
Though of its highs for the year gold is still up 9.5% in 2014. A key factor supporting the gold price this year has been the surprising decline in global interest rates and real yields.
As yields rise, the opportunity costs of holding gold increases because the metal is not income producing. Higher rates also boost the value of the dollar which usually move in the opposite direction of the gold price.
The benchmark German 10-year bund yield fell to a record low of 1.1% Tuesday and Spanish bond yields dipped below that of the US as the European Central Bank’s unprecedented moves to stoke inflation and economic activity continues to fall short.
US interest rates, despite the Federal Reserve gradual tightening of its loose monetary policy since December last year, have remained stubbornly low. Benchmark US treasuries fell further below 2.5% on Tuesday, compared to 3% last year.
The Federal Reserve’s Open Market Committee meeting today and Wednesday and the key US employment report on Friday will give further direction for US monetary policy and the gold price.
