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Mining industry

Gold Market Update: Inverse Relationship with Dollar Returns, Markets Experience Losses

Strategic Insights

— 2 min read

Gold futures resumed their traditional inverse relationship with the U.S. dollar, causing concerns for the yellow metal's future, as analysts noted. Despite high gold and copper prices, Freeport-McMoran Copper & Gold Inc. has cut its debt by $170 million this year. The European Central Bank reported a decrease in the Eurosystem's gold reserves, while Oxiana Ltd.'s Prominent Hill project received a gold resource upgrade. Meanwhile, Aflease Gold and Uranium Resources Ltd. acquired a gold mine from AngloGold Ashanti Ltd., and Jubilee Platinum confirmed the presence of Merensky and UG2 Reefs at its Tjate project.

Key Takeaways:

  • The gold market seems to have resumed its traditional inverse relationship with the U.S. dollar, which could lead to trouble for the yellow metal in the future.
  • Freeport-McMoran Copper & Gold Inc. has reduced its debt by $170 million this year, due to high gold and copper prices and the company's access to higher-grade ores.
  • The Eurosystem's gold reserves decreased by EUR77 million to EUR138.298 billion in the week ended July 15.
  • Oxiana Ltd. received a gold resource upgrade at its Prominent Hill project, leading analysts to rework their models.
  • Aflease Gold and Uranium Resources Ltd. acquired the Weltevreden gold mine from AngloGold Ashanti Ltd. for 75 million rand ($1=ZAR6.7428).
  • Jubilee Platinum confirmed the presence of Merensky and UG2 Reefs at its Tjate project through step-out drilling.
  • The Australian government was urged to stimulate exploration activity in the A$5 billion gold industry to prevent slipping further down the global prospecting destinations list.
  • Mano River Resources Inc. approved a strategic plan to separate its gold and diamond assets into two separate public corporations.
  • Falkland Gold and Minerals Ltd. identified 23 targets for gold and minerals exploration in the Falkland Islands, several of which have coincident alluvial gold in adjacent drainage systems.
  • Gold and silver futures experienced small losses in New York, attributed to a firmer tone in the U.S. dollar.
  • Spot gold traded on the Shanghai Gold Exchange closed lower, tracking the downtrend in international spot gold.

Statistics:

  • Gold futures are inversely related to the U.S. dollar, causing concerns for the yellow metal.
  • Freeport-McMoran Copper & Gold Inc. reduced its debt by $170 million this year.
  • The Eurosystem's gold reserves decreased by EUR77 million to EUR138.298 billion in the week ended July 15.
  • Oxiana Ltd.'s Prominent Hill project received a gold resource upgrade.
  • Aflease Gold and Uranium Resources Ltd. acquired the Weltevreden gold mine for 75 million rand ($1=ZAR6.7428).
  • Jubilee Platinum confirmed the presence of Merensky and UG2 Reefs at its Tjate project through step-out drilling.
  • Mano River Resources Inc. approved a strategic plan to separate its gold and diamond assets into two separate public corporations.
  • Falkland Gold and Minerals Ltd. identified 23 targets for gold and minerals exploration in the Falkland Islands.
  • Gold and silver futures experienced small losses in New York, attributed to a firmer tone in the U.S. dollar.

Sources:

  • Dow Jones Commodities News via Comtex, Jul 19, 2005
  • Freeport-McMoran Copper & Gold Inc.
  • European Central Bank
  • Oxiana Ltd.
  • Aflease Gold and Uranium Resources Ltd.
  • AngloGold Ashanti Ltd.
  • Jubilee Platinum
  • Mano River Resources Inc.
  • Falkland Gold and Minerals Ltd.
  • Shanghai Gold Exchange
  • Dow Jones Newswires
  • COMTEX (http://www.comtexnews.com)

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