Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
The gold price had another good Monday after gaining more than $20 for a spot price of $1,264 by noon. The morning boost simmered to $1,257 by closing.
Last Monday the precious metal’s spot price had a similar rally, though it reached nearly $1,270 that day.
Futures trading also rose sharply: Gold for April delivery – the most active contract – gained $18 to $1,257 on the NYMEX, nearly making up for last week’s drop.
Gold bugs have the US economy to thank for the gains after the Institute for Supply Management (ISM) reported a Purchasing Managers Index (PMI) of 51.3% – down 5.3% from December’s seasonally adjusted reading of 56.5%.
This level is still above the magic 50% mark which distinguishes economic expansion from contraction. The PMI – which is based on a survey of manufacturing supply managers – is considered an important indicator of the health of the US economy.
The ISM’s report also noted that the manufacturing sector expanded for the eighth consecutive month in January.
George Gero, a vice president and metals strategist with RBC Capital Markets told the Wall Street Journal that some of the buying was from automatic buy orders triggered by gold’s rise above $1.250 per ounce.
