Gold Market Reacts to Bundesbank's 8-Ton Gold Sale Announcement

Strategic Insights -

The Deutsche Bundesbank's decision to sell only 8 metric tons of gold instead of the expected 120 tons has sparked a mixed reaction from analysts, with some viewing it as neutral to mildly positive for the gold market. The announcement was made as part of the European Central Bank's Gold Sales Agreement, which allows the Bundesbank to sell a portion of its gold reserves. Meanwhile, in other market developments, Goldcorp Inc. is facing a takeover bid from Glamis Gold Ltd., while Harmony Gold Mining Co. Ltd. has reduced its mineral reserves to 59.1 million ounces from 62.2 million ounces previously announced.

Key Takeaways:

  • The Bundesbank's decision to sell 8 metric tons of gold instead of 120 tons is neutral to mildly positive for the gold market, according to analysts.
  • The European Central Bank's Gold Sales Agreement allows the Bundesbank to sell a portion of its gold reserves, but the exact terms of the sale were not disclosed.
  • Goldcorp Inc. is facing a takeover bid from Glamis Gold Ltd., but Goldcorp's CEO, Rob McEwen, has stated that a deal with Wheaton River Minerals Ltd. offers more long-term upside for the company.
  • Harmony Gold Mining Co. Ltd. has reduced its mineral reserves to 59.1 million ounces from 62.2 million ounces previously announced.
  • Gold Fields Ltd. is still exploring a potential deal with Harmony Gold Mining Co. Ltd. after a meeting in Moscow between the company, its major shareholder Norilsk Nickel & Mining, and Harmony Gold Mining Co. Ltd.
  • Lonmin said that repairs to its No. 1 smelter at its operations in South Africa are proceeding according to plan.
  • Spot palladium is vulnerable to a slide to a 19-month low at $150 a troy ounce over the coming weeks, according to industry analysts.

Statistics:

  • The Bundesbank's gold reserves: 8 metric tons
  • Goldcorp Inc.'s mineral reserves: not disclosed
  • Harmony Gold Mining Co. Ltd.'s mineral reserves: 59.1 million ounces
  • Lonmin's smelter repairs: proceeding according to plan
  • Spot palladium price: vulnerable to a slide to $150 a troy ounce
  • Gold futures on the Comex division of the New York Mercantile Exchange: $427.70 per ounce
  • U.S. dollar index: 89.99
  • Spot gold price: around $441 a troy ounce in thin volumes

Sources:

  • "Buba 8-Ton Gold Sale Neutral To Positive For Mkt" (December 20, 2004, Dow Jones Newswires)
  • "Bundesbank Confirms Will Use Option To Sell Gold" (December 20, 2004, Dow Jones Newswires)
  • "Glamis: Plans To Ensure Goldcorp Shareholders Get Choice" (December 20, 2004, Dow Jones Newswires)
  • "Harmony Cuts Ore Reserves To 59.1 Mln Oz From 62.2 Mln Oz" (December 20, 2004, Dow Jones Newswires)
  • "German Fin Min Eichel Lobbies For Buba Gold Sale - Report" (December 20, 2004, Dow Jones Newswires)
  • "Bundesbank Fights Over Sale Of Gold Reserves" (December 20, 2004, Dow Jones Newswires)
  • "Bundesbank: Likely To Release Gold Sales Details Next Week" (December 17, 2004, Dow Jones Newswires)
  • "Harmony,Gold Fields Talks 'Constructive'; No Details Given" (December 17, 2004, Dow Jones Newswires)
  • "Goldcorp CEO: Two Separate Proposals Have Their Own Fans" (December 17, 2004, Dow Jones Newswires)
  • "Goldcorp's McEwen Says Wheaton's Upside Tops Glamis's" (December 17, 2004, Dow Jones Newswires)
  • "Goldcorp To Review Glamis Offer Once It's Received" (December 17, 2004, Dow Jones Newswires)
  • "Gold Fields Sees Outcome Of Norilsk, Harmony Mtg Uncertain" (December 17, 2004, Dow Jones Newswires)
  • "Lonmin: S Africa Smelter Repairs Proceeding To Plan" (December 17, 2004, Dow Jones Newswires)
  • "FOCUS: Spot Palladium Could Slide To $150/Oz - Analysts" (December 17, 2004, Dow Jones Newswires)
  • "MARKETS: NY Precious Metals Review: Gold Up But Off Early Highs" (December 20, 2004, Dow Jones Newswires)
  • "Europe Precious Metals: Spot Gold Little Changed" (December 20, 2004, Dow Jones Newswires)