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Mining industry

Gold Prices See Mixed Outlook for Q1 2005 as Bundesbank Announces Planned Gold Sales

Strategic Insights

— 3 min read

As the new year begins, gold prices are expected to see a mixed outlook for the first quarter of 2005. Barclays Capital predicts an average price of $415 per troy ounce during this period, with the low at $350/oz and the high at $470/oz. Meanwhile, the Bundesbank has announced that it will release details of its planned gold sales next week, which could impact the market.

Goldcorp Inc., a Canadian gold miner, has received a takeover bid from Glamis Gold Ltd. of 0.89 of a Glamis common share for each Goldcorp share. However, a Glamis shareholder has expressed disappointment with the bid, stating that Glamis would be better off buying gold deposits or continuing alone. In related news, Goldcorp's chairman and CEO, Robert McEwen, has said that a combination with Wheaton River Minerals Ltd. offers more long-term upside for the company than a deal with Glamis Gold Ltd.

Other notable developments include Barrick Gold Corp.'s Alto Chicama project in Peru, which is over 60% complete and expected to reach the first gold pour in the third quarter of 2005. Minera Yanacocha SRL is also on track to meet its production target of about 3.0 million ounces of gold this year. However, South Africa's gold output is set to fall below 350 metric tons this year, the lowest level since 1947, as mines struggle to profitably exploit the world's largest gold reserves.

Key Takeaways:

  • Barclays Capital predicts an average gold price of $415 per troy ounce during Q1 2005, with a low of $350/oz and a high of $470/oz.
  • The Bundesbank will release details of its planned gold sales next week, which could impact the global gold market.
  • Goldcorp Inc. has received a takeover bid from Glamis Gold Ltd. of 0.89 of a Glamis common share for each Goldcorp share.
  • A Glamis shareholder has expressed disappointment with the bid, stating that Glamis would be better off buying gold deposits or continuing alone.
  • Goldcorp's chairman and CEO, Robert McEwen, has said that a combination with Wheaton River Minerals Ltd. offers more long-term upside for the company than a deal with Glamis Gold Ltd.
  • Barrick Gold Corp.'s Alto Chicama project in Peru is over 60% complete and expected to reach the first gold pour in the third quarter of 2005.
  • Minera Yanacocha SRL is on track to meet its production target of about 3.0 million ounces of gold this year.
  • South Africa's gold output is set to fall below 350 metric tons this year, the lowest level since 1947.

Statistics:

  • Barclays Capital predicts an average gold price of $415 per troy ounce during Q1 2005.
  • The low gold price during Q1 2005 is expected to be $350/oz.
  • The high gold price during Q1 2005 is expected to be $470/oz.
  • The Bundesbank is set to release details of its planned gold sales next week.
  • Goldcorp Inc. has a market capitalization of approximately $3.5 billion.
  • Glamis Gold Ltd. has a market capitalization of approximately $2.5 billion.
  • Barrick Gold Corp.'s Alto Chicama project is expected to produce over 500,000 ounces of gold per year.

Sources:

  • "Precious Metals Outlook Mixed For Q1 05; Gold Up" by Dow Jones (December 17, 2004)
  • "Bundesbank: Likely To Release Gold Sales Details Next Week" by Dow Jones (December 17, 2004)
  • "Goldcorp's McEwen Says Wheaton's Upside Tops Glamis's" by Dow Jones (December 17, 2004)
  • "Gold Fields Sees Outcome Of Norilsk, Harmony Mtg Uncertain" by Dow Jones (December 17, 2004)
  • "Lonmin: S Africa Smelter Repairs Proceeding To Plan" by Dow Jones (December 17, 2004)
  • "FOCUS: Spot Palladium Could Slide To $150/Oz - Analysts" by Dow Jones (December 17, 2004)
  • "Glamis Gold Plans Takeover Bid For Goldcorp" by Dow Jones (December 17, 2004)
  • "While Wooing Wheaton, Goldcorp Knew Glamis Plans - Source" by Dow Jones (December 17, 2004)
  • "Glamis Hldr 'Disappointed,' Says Overpaying For Goldcorp" by Dow Jones (December 17, 2004)
  • "Barrick's Alto Chicama Peru Project Over 60% Complete" by Dow Jones (December 17, 2004)
  • "Peru's Yanacocha: To Produce 3 Mln Oz Of Gold This Year" by Dow Jones (December 17, 2004)
  • "FOCUS: S Africa Gold Output On The Wane, Worse To Come" by Dow Jones (December 17, 2004)
  • "NY Precious Metals Review: Gold Up On Oil's Coattails" by Dow Jones (December 17, 2004)
  • "Europe Precious Metals: Spot Gold Rangebound At $438/Oz" by Dow Jones (December 17, 2004)

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