Kitco.com  - Courtesy of Tuesday’s central bank action, nearly all participants in the weekly Kitco News Gold Survey expect the gains gold posted this week to continue into next week.

In the Kitco News Gold Survey, out of 32 participants, 21 responded this week. Of those 21 participants, 19 see prices up, while one sees prices down, and one sees prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts.

The central bank liquidity injection to help make it easier for European banks to access U.S. dollars is considered bullish for gold (and other hard assets) as more money is flushed into the global economy. Inevitably, that money will look for a home, some of it which will find its way to the gold market, several survey participants said.

In addition, others pointed to the inflows of money into gold exchange-traded funds in November as evidence of investor interest in having exposure to gold.

The central bank action has reignited the inflation debate, which is going to be the next catalyst for higher gold prices, said Ira Epstein, director of the Ira Epstein division of The Linn Group.

Still, others said if the situation turns worse for Europe, gold could revert to its safe-haven status, which would support the metal’s value.

The participant who sees weaker prices said gold could see a modest pull back from the current levels as traders look for clarity out of next week’s meeting of European leaders.

The participant who expects prices to ultimately be unchanged is waiting to see if gold has put in a bottom with this week’s action.

By Debbie Carlson of Kitco News dcarlson@kitco.com

Cecilia Tulikowski-Denison and Alexander Letourneau contributed to the survey.

Reuters – Goldcorp said on Monday that the Quebec government has given the green light to its Eleonore project, allowing Canada’s second largest gold producer to start full construction at the mine in Northern Quebec.

The project, which is located in the James Bay region of Quebec, is expected to boost Goldcorp’s output by 600,000 ounces of gold a year, with cash costs under $400 per ounce.

Eleonore will be one of the largest underground mines in Canada and is expected to cost $1.4 billion to build. First production is slated for late 2014.

The certificate of authorization comes after the Vancouver-based company reached a collaborative agreement with local First Nations communities.

It allows for a second shaft to be sunk at the site and for the construction of related infrastructure, including a processing facility, an access road and a power plant.

Shares of Goldcorp, which owns projects throughout the Americas, were down 1.67% at $53.67 on Monday on the Toronto Stock Exchange, as the spot price for gold slipped slightly to $1,778 an ounce on a stronger U.S. dollar.

NEW YORK (Dow Jones)–Gold rose Tuesday as a sharply lower dollar and the metal’s declines to two-week lows drew some buyers back to the market.

The most actively traded gold contract, for December delivery, rose $16.80, or 0.9%, to settle at $1,830.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby

Gold futures fell by more than 2% Monday, and some traders Tuesday were reluctant to bet on further declines with Europe’s debt crisis continuing to underpin demand for the metal as a safe haven.

“Risk is off the table,” said Jon Nadler, an analyst with bullion dealer Kitco Metals. “At least for this week.”

Some investors buy gold on the belief that it holds its value well during economic turmoil, and worries that European leaders won’t be able to stave off a default-sparked credit crunch have kept investors interested in the metal despite its recent struggles. An Italian bond auction Tuesday disappointed, concerns mounted about the health of some of France’s largest banks, and a brief bout of optimism that China’s sovereign wealth fund might prop up struggling European economies faded.

Since climbing above the $1,900 mark for the first time early last week, gold has lost much of its momentum as investors viewed briefly stable equities markets and a stronger dollar as an opportunity to cash out after the market’s steep gains.

Though gold and the dollar can rise in tandem when investors are seeking a safe place to park cash, the assets have historically shown an inverse relationship, as a strong dollar makes dollar-denominated gold more expensive for buyers using other currencies.

The dollar was sharply lower against other major currencies Tuesday, adding fuel to gold’s rise. The ICE U.S. Dollar Index was at 76.836 near the close of Comex floor trading, down from as high as 77.656 late Monday in New York.

Gold futures dipped below the $1,800 mark early Tuesday, but quickly rebounded above the key psychological level. Market participants who place bets based on patterns in trading activity likely view that strength as a sign that further gains are ahead for gold, said Sterling Smith, an analyst with Country Hedging.

“As people see that level is not breached, it has inspired some buying,” Smith said.

Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,820.00; previous PM $1,834.00
Dec gold $1,830.10, up $16.80; Range $1,794.80-$1,846.30
Dec silver $41.193, up 97.6 cents; Range $40.090-$41.385
Oct platinum $1,813.50, up $4.10; Range $1,804.30-$1,831.80
Dec palladium $728.50, up $17.15; Range $706.20-$732.00

-By Matt Day, Dow Jones Newswires; 212-416-4986; matt.day@dowjones.com

–Tatyana Shumsky contributed to this article.

Dow Jones – NEW YORK (Dow Jones)–A gold rush swept across the global investment community Wednesday, sending prices above $1,800 on fears that France may lose its top-notch credit rating.

Gold has rallied 25.5% this year, breaking through four round-number thresholds as appetite for a haven grows while the number of low-risk assets declines. Gold is considered a hedge against economic and political risk because it tends to keep its value better than stocks or other assets during times of high uncertainty.

As the Dow Jones Industrial Average plummeted more than 400 points Wednesday amid euro-zone jitters, gold futures hit a record $1,801.00 a troy ounce.

Paul Christopher, international markets strategist at Wells Fargo, said the appetite for gold from retail investors is getting out of hand.

“We’re going to see gold-dispensing machines like Coke machines soon,” he said.

French President Nicolas Sarkozy cut short a planned holiday to hold an unscheduled cabinet meeting, and the government said it would consider fresh tax hikes, spending cuts and other budget measures to bolster the country’s fiscal standing.

But concerns remain that Europe’s financial system will buckle if sovereign-debt problems, which have dogged smaller economies like Greece and Ireland, will spread to the larger economies of Italy and France.

“Greece is small potatoes compared to Italy, and then you look at France. The main reason we’re seeing the push higher today is jitters in Europe,” said Bob Haberkorn, senior market strategist at MF Global. “People are looking to store their wealth, and they don’t see a lot of options with the exception of gold right now.”

The most actively traded contract, for December delivery, settled at a record $1,784.30 a troy ounce, up $41.30, or 2.4%. December-delivery gold touched an intraday record of $1,801.00.

The front-month contract, for August delivery, gained $41.30, or 2.4%, to settle at a record $1,781.30 a troy ounce and touched an intraday record of $1,795.60.

Gold’s record-breaking rally gathered steam last week, first after U.S. lawmakers reached a last-minute deal to raise its debt ceiling, and later on the back of Standard & Poor’s unprecedented decision to downgrade U.S. debt.

However, as gold prices march higher, the risk of a sharp pullback is also growing.

“You’re getting to a point where gold’s rallied $160 an ounce since the end of July. By any stretch of the imagination, that’s one heck of a rally,” said Ira Epstein, director of the Ira Epstein division of the Linn Group.

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com

National Post – Global gold production may have hit a record last year, but that doesn’t mean the stuff is getting easier to find. Clarus Securities analyst Laurie Curtis wrote that the growing difficulties in finding gold suggest that high-grade deposits will command a stronger premium over time.

Citing data from the Society of Economic Geologists, Mr. Curtis noted that the number of deposits and total ounces found peaked in the 1980s “and have been steadily declining ever since.”

Additionally, the cost of discovery has increased from US$10 per ounce in the 1980s to more than US$47 an ounce in 2009, and there has been a decline in the average gold mining grade from 10 grams per tonne (in 1965-1975) to less than one gram in 2008, according to the data.

“Successful gold discovery is becoming more challenging, and over the long term is not sustainable at current rates of demand,” Mr. Curtis wrote.

“Fundamental trends point to a lowering grade curve [driven by increasing gold prices] as the only way to sustain supply. Higher capital costs and lower grades are going to be intrinsic to future resource development, resulting in a game of risk management.”

In that kind of environment, Mr. Curtis believes that deposits with a potential of more than one million ounces and/or grades higher than three grams per tonne will be more and more valuable. Some of Clarus’s gold mining recommendations include Dalradian Resources Inc., Orvana Minerals Corp., Chalice Gold Mines Ltd., Colossus Minerals Inc., and Continental Gold Ltd.

Reuters – Gold settled a notch higher on Monday as investors held to it as a safe bet against growing concerns over euro zone finances, while a relatively strong dollar capped gains in the precious metal.

The euro slid against the dollar after the region’s finance ministers gave Greece two weeks to approve further spending cuts and tax rises in exchange for another 12 billion euros in emergency loans.

The spot price of bullion was at $1,540.80 per ounce by 3:15 p.m. EDT (1915 GMT), compared with $1,538.40 in New York late on Friday.

Gold priced in sterling hit a record high at 954.63 pounds in Monday’s trade.

U.S. gold futures’ benchmark August contract finished the official session up $2.90, or 0.2 percent, at $1,542 per ounce.

“The ultimatum from the European Union to Greece, and concerns there might be a Greek default after all these, is keeping the safe-haven bid going for gold,” said Bruce Dunn, vice president at New Jersey-based precious metals dealer Auramet Trading.

“But the dollar has been holding up pretty well too, and that’s stopping gold from really making a big run for now.”

Robin Bhar, precious metals analyst with Credit Agricole in London, said gold was likely to be stuck in its present range until the Greek bailout was resolved.

“You’re not going to get too much movement either way until we get more clarification as to what happens on Greece. The market is hungry for an actual agreement to be signed, sealed and dusted.”

On the U.S. front, outlook for both gold and the dollar was fraught with uncertainty as investors await the U.S. Federal Reserve’s meeting and decision this week on interest rates.

Financial markets are bracing for the conclusion at the end of June of the Fed’s “QE2″ program, a cheap-money policy credited with boosting stocks but blamed for sky-high commodities prices and a weak dollar.

“Investors will be trying to see how far or how high the bar for the next round of quantitative easing will be. If this bar is actually lowered, then I think it will be beneficial for gold,” said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.

“If it is high, then I think gold will still remain in its current range bounds that we are seeing. I don’t think they will do QE3 now.”

IMF WARNING

Recent gains in gold were driven by debt problems in Europe, inflation fears in China following strong economic data and worries about a U.S. economic slowdown.

The International Monetary Fund cut its forecast for U.S. economic growth and warned Washington and debt-ridden European countries that they are “playing with fire” unless they take immediate steps to reduce their budget deficits.

Jewelers in Indonesia have started making inquiries for gold ahead of the fasting month of Ramadan in August, and those in Hong Kong look happy to buy on dips. But volatile bullion prices have also scared off investors in Japan, dealers said.

Data last week from the U.S. Commodity Futures Trading Commission showed money managers cutting their bullish bets in gold futures and options after raising them in the past three weeks, as bullion prices fell.

Silver reversed losses and was at $35.97 an ounce from $35.80, below a record at $49.51 an ounce in April.

Platinum hit its lowest since end-March at $1,720.50 an ounce. It later was at $1,728.49 from Friday’s $1,750.65 an ounce.

(Additional reporting by Lewa Pardomuan in Singapore; Editing by Marguerita Choy)

What was once unthinkable for mainstream economists has now become irresponsible to dismiss: The dollar’s reserve status is in jeopardy, thanks to soaring U.S. deficits, political gridlock and the Fed’s super-easy policies.
The lack of a suitable replacement is probably the best thing the dollar has going for it right now. Europe’s debt crisis has revealed the euro’s structural flaws and China’s yuan remains immature and pegged to the greenback.
“The Chinese are as much a captive of their currency system as say the Germans and German banks are right now of the euro,” says economist Peter Morici, a business professor at the University of Maryland. “They’ve created a wonderful export contraption of which we are both hostage.”
Gold is most often cited as suitable alternative to the dollar, and its continued strength amid the dollar’s recent rally vs. the euro has only reinforced its adherence.
Morici is bullish on gold — “its downside risks are not large,” he says — but does not believe a return to the gold standard is likely or practical.
“The relative importance of the dollar will shrink [but] there’s not enough gold in the world to mint coins to support commerce,” he says. “A gold standard would require what we had in the late 19th century in the United States: chronic deflation and high unemployment that goes with it.”
Rather than abandoning the dollar in favor of gold, Morici foresees a “bi-metallic standard” in which gold is viewed as something akin to a co-reserve currency for global transactions.
“Contracts will be written to some degree for payment of gold or gold will be a contingent payment,” he says. Meanwhile, central banks are increasing their gold holdings rather than rely solely on Treasuries or other currencies backed by dollar.
“That’s not because it’s a good thing or a bad thing, it’s simply what is happening,” he says. “Unless the U.S. finds a way to lower unemployment to 6% and not experience significant inflation in the process, [the dollar] will diminish in importance and gold will be enhanced in importance.”
Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com

SAN FRANCISCO (MarketWatch) — Silver futures led a recovery in the precious metals sector Monday and gold topped $1,500 an ounce as investors tested the waters for price stability in a still-cautious market after commodities’ plunge last week.

Silver futures for July delivery SIN11 +5.89% rose $2.25, or 6.4%, to $37.54 an ounce on the Comex division of the New York Mercantile Exchange after tapping a high of $37.98 overnight.

The contract skidded $2.63, or 1%, on Friday to complete its worst week in more than three decades. The metal was still down more than 20% so far in May. Read about Friday’s action in metals.

June gold futures GCM11 +0.93% , meanwhile, rose $18.10, or 1.2%, to $1,509.70 an ounce, extending its $10.20, or 0.7%, increase on Friday. Prices are still more than 3% lower month to date.

For the precious metals, “volatility is likely to remain high in the coming sessions, with traders and investors cautious of another bout of long selling, particularly in silver,” analysts at TheBullionDesk.com said in an early morning note to clients.

“While the corrections are likely to entice fresh demand from physical and investment sources buyers, may hold-off until some price stability emerges with the metals still vulnerable to downside pressure,” they said. Read about investors pulling money from commodity-sector funds.

The precious-metals complex may be seeing some support from political unrest over the weekend in Syria, Egypt and Bahrain, according to Ben Potter, markets strategist at IG Markets in Melbourne.

Several protestors were reportedly killed in Syria over the weekend in clashes with government forces, while the Los Angeles Times reported 12 deaths in Egypt in the wake of violent riots between Muslims and Christians.

Bigger picture

Overall, there is some price risk for the precious metals from a possible rebound in the dollar when the U.S. Federal Reserve’s second round of quantitative easing is diminished, said Richard Hastings, a macro strategist at Global Hunter Securities.

“This should result in a brief rebound in the dollar and perhaps some pressure on some materials prices, but it will very likely be temporary,” he said in emailed comments.

In recent dealings, the U.S. dollar index DXY +0.07% , which measures the greenback against a basket of six currencies, rose to 75.042 from 74.790 late Friday after Standard & Poor’s lowered its credit rating on Greece, reviving worries that peripheral debt woes will force European officials to change the terms of its bailouts. Read about Monday’s currencies action.

“We’re seeing the DXY break through 75, but this is not enough to stop global demand for diversification,” said Hastings.

“There is also the risk that higher demand for dollars due to diminished Fed buying could result in faster cycling of dollars into non-dollar assets … so the longer-term outlook for gold remains favorable with a much longer pathway for silver to make it back above $43 and then back to $47,” he said.

Other analysts remained upbeat on silver’s outlook as well.

“Despite the sell-off the big picture trend is higher,” said Mark Leibovit, chief market strategist at VRTrader.com.”Too many people are being convinced that the recent rally was a bubble. I would bet these same people didn’t buy silver and gold when I did in 2001.

Paul Mladjenovic, author of “Precious Metals Investing for Dummies,” said that “seasoned investors and speculators understand that last week’s 34% correction in silver had nothing to do with any major changes in silver’s overall fundamentals or long-term outlook.” Read about smart money leaving silver.

“They understood that silver was temporarily over-bought and the tipping point was the unprecedented margin increases by the exchange,” he said.

In other metals trading Monday, July platinum futures PLN11 +0.39% climbed $8.60 to $1,795 an ounce and June palladium PAM11 +1.51% added $14.50 to $730.80 an ounce. July copper HGN11 +1.16% rose 6.3 cents to $4.04 a pound.

Myra Saefong is a MarketWatch reporter based in San Francisco.
Varahabhotla Phani Kumar is a reporter in MarketWatch’s Hong Kong bureau.

Chron – NEW YORK — A free-fall in commodities and an unexpected jump in unemployment claims put financial markets on edge Thursday, dragging the stock market lower.
Oil prices fell nearly $10, or 9 percent, to close below $100 a barrel for the first time since mid-March. Silver lost 8 percent to settle at $34.41; the metal already had its biggest one-day drop in three decades on Tuesday and is nearly $16 off its high of $50 reached last week. And gold fell 2.3 percent to $1,474.90 an ounce.
Commodities like oil and cotton had risen by more than 25 percent over the past year. Some, like silver, remain up nearly 100 percent over this time last year, despite Thursday’s decline. Thursday’s pullback indicated that some speculators were locking in their gains and that other investors were protecting profits because of concerns that Friday’s jobs reports may be worse than originally thought, say experts. That could lead to weaker demand from consumers.
“Speculators are unwinding their positions to take a profit,” said Peter Fusaro, the chairman of Global Change Associates, an energy trading consultant in New York.
Energy companies fell, mimicking the price of oil. Exxon Mobil, Chevron, and Schlumberger each lost more than 2 percent. The drop in oil prices was a boost to companies like Delta Air Lines, which gained 7 percent.
Stock indexes fell after the Labor Department said that first-time claims for unemployment benefits rose to 474,000 last week, the highest level in eight months. Forecasters didn’t see it coming. Economists had expected claims would drop to 410,000.
The Dow Jones industrial average lost 139.41 points, or 1.1 percent, to 12,584.17. The S&P 500 dropped 12.22, or 0.9 percent, to 1,335.10. The Nasdaq composite fell 13.51, or 0.5 percent, to 2,814.72.
Government bonds rose, pushing long-term interest rates to their lowest levels this year. The yield on the 10-year Treasury note sank to 3.16 percent.
Applications for unemployment benefits have increased in three of the previous four weeks. The jump in claims, along with other signs the economic recovery is losing strength, have raised concerns about what the government’s monthly jobs report for April will reveal when it’s released on Friday.
Economists forecast that employers added 185,000 workers in April. The unemployment rate is expected to remain unchanged at 8.8 percent.
Meanwhile, gas is nearing $4 per gallon and major packaged goods companies have implemented price increases on every day purchases, leading some analysts to worry that consumers will cut back on spending.
Prior to Wednesday, rising earnings had been driving stocks up in recent weeks. But even strong results reported Thursday by several large companies did not outweigh concerns about the economic recovery.
General Motors Co. was among the companies reporting higher profits Thursday. GM said its earnings more than tripled on stronger sales in the U.S. and China. Despite the results, GM fell 3 percent.
Other companies that reported strong earnings rose. Whole Foods Market Inc. gained 0.4 percent after its quarterly report topped Wall Street’s estimates. Estee Lauder Cos. gained 1.2 percent after it said earnings doubled on stronger sales.
Despite losses over the last two days, the broader markets are up — the S&P, for one, is up 15 percent, not including dividends — in the year since the “flash crash” led many investors to flee the market.
Friday marks the one-year anniversary of the “flash crash” when the Dow sank nearly 1,000 points in less than a half hour. Some stocks lost a third of their value in four minutes.
The market regained most of its losses by the end of the day, but the wild ride left a mark. Fund managers say the “flash crash” made everyday investors, still wary after the financial crisis, more reluctant to trust their savings to the stock market. They began pulling cash out of mutual funds that invest in stocks and favoring bond funds instead.
A pair of economic reports pushed stocks lower Wednesday. Payroll processor ADP said companies added fewer jobs in April than economists had expected. In a separate report, the Institute for Supply Management said its service sector index rose at the slowest pace in 8 months in April.
Two stocks fell for every one that rose on the New York Stock Exchange Thursday. Consolidated volume came to 4.8 billion shares.

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Glencore has quickly flexed its new financial muscle by announcing a $3.2bn deal to buy a Kazakhstan mining group on the day it unveiled its public share offering valuing the trading group at about $60bn.

The world’s biggest commodities trader’s determination to participate in the consolidation of the natural resources industry comes as oil, copper and corn prices have surged as a result of the industrialisation of emerging economies.

Ivan Glasenberg, chief executive, told the Financial Times that the cash and shares acquisition of Kazzinc was the “first display” of the new force of the Swiss-based company following four decades of private ownership. “We have now the firepower,” he said, explaining that as a privately owned company Glencore would not have been able to buy Kazzinc.

This week, he said that Glencore could target bigger acquisitions of between $4bn and $5bn, adding that its strategy would be opportunistic and disciplined.

Miriam Hehir, at RBC Capital in London, said that Glencore’s IPO could herald a series of mergers and acquisitions. “We continue to see a combination of Glencore and Xstrata as a very likely outcome in the next 12 months and would expect equity to be the dominant funding currency,” she said.

Glencore already owns a majority stake of 34 per cent in Xstrata, the London-listed miner, and Mr Glasenberg has said he sees value in merging both companies.

In a regulatory filing on Thursday, Glencore revealed plans to sell a 15 per cent to 20 per cent stake in London and Hong Kong in mid-May worth up to $11bn. Including the so-called “greenshoe” – or overallotment option – the flotation is set to raise just above $12bn, valuing the company at between $45bn and $73bn. Glencore expects to price its IPO around May 19, becoming a public company a few days later.

The flotation will realise a massive paper profit for the 485 employees who own shares. Glencore was founded in 1974 by Marc Rich, the oil trader who was subsequently indicted for tax evasion in the US and pardoned by President Bill Clinton on his last day in the White House. Mr Rich sold Glencore to its management for $600m in 1993-94.

The IPO announcement was marred by a delay in naming a company chairman. After a few hours, Glencore disclosed it had chosen Simon Murray, the Hong Kong taipan and former French legionnaire. Tony Hayward, the former BP head who resigned after the Gulf oil spill, will join Glencore’s board as senior independent director.

In addition, it announced that non-executive directors joining the board would be Peter Coates, until last week chairman of Australian miner Minara; Leonhard Fischer, chief executive of merchant bank RHJ International; William Macaulay, chief executive of US private equity house First Reserve; and Li Ning, executive director of Hong Kong-based property developer Henderson Land Development.

Glencore said it expected to become only the third company – and the first in 25 years – to enter the FTSE 100 index on its first day of trading under the so-called “fast entry rule”, which allows a company to join if its full market capitalisation amounts to 1 per cent or more of the full capitalisation of the FTSE All-Share index.

The sale is set to become the largest in London and the third largest in Europe, after the flotation in the late 1990s of Deutsche Telekom and Enel of Italy.

Glencore mandated Citigroup, Credit Suisse and Morgan Stanley as global co-ordinators and joint bookrunners for its offer. Bank of America-Merill Lynch, BNP Paribas were appointed joint bookrunners, Barclays Capital, Société Générale and UBS were appointed co-bookrunners and Liberum Capital was also appointed to the syndicate. The trader said that Linklaters was its legal adviser, while Clifford Chance was advising the bank’s syndicate.