Gold lost ground this week, while oil, natural gas and copper were mostly flat on new data that indicates the slowdown in China may be easing. The US economy, meanwhile, continued to show signs of improvement.
On Thursday, China reported that its economy grew at an annualized rate of 7.4 percent in the third quarter. That’s down from 7.6 percent in the previous quarter. It’s also the slowest rate of expansion since 2009.
However, the country’s Bureau of Statistics also reported that industrial production rose 9.2 percent in September from a year ago. That’s up from 8.9 percent growth in August and ahead of the 9 percent that economists were expecting. Retail sales also rose 14.2 percent during the month, well above the consensus forecast of 13.2 percent.
“We can tentatively conclude that the economy is shifting from a state of slowing down to one of bottoming out,” said statistics bureau spokesman Sheng Laiyun.
Meanwhile, US housing starts posted their fastest growth rate since July 2008. On Wednesday, the Department of Commerce said that home builders broke ground on 15 percent more homes in September, bringing the total to a seasonally-adjusted 872,000 units.
“One of the big headwinds for the economy has been the weak housing market and this indicates that headwind has dissipated,” said economic strategist Gary Thayer of Wells Fargo Advisors.
In morning trade Friday, Brent crude is down 0.65 percent at $112.49 a barrel, while copper is down 1.67 percent at $3.68 a pound. Gold is down 0.52 percent at $1,737.20 an ounce.
CIBC World Markets predicted this week that gold could soon resume its rise due to QE3, the Federal Reserve’s $40-billion-a-month bond-buying program.
“QE1 and QE2 were the drivers for gold price increases in the order of $20 to $30 (U.S.) per month,” wrote analysts Barry Cooper and Alec Kodatsky in a research note quoted by The Globe and Mail. “We expect that QE3 will offer something between these figures, although on a percentage basis the moves will not be as significant due to the higher gold price.”
For 2013, the bank sees gold trading around $2,000 an ounce, rising to $2,200 in 2014.
Gold Fields (NYSE:GFI) said that more miners returned to work at its South African operations yesterday as the country continues to deal with a month-long strike that has seen 80,000 miners walk off the job, mostly in the gold and platinum sectors.
This week, 9,000 workers returned to work at the company’s Beatrix mine and 11,000 were back on the job at its KDC West mine. They returned after Gold Fields threatened to fire workers who did not return to work by Thursday. The company ended up terminating 1,500 employees, but it is giving them until Friday to appeal their dismissals. Gold Fields said it will shortly issue a similar ultimatum to 8,000 striking workers at its KDC East mine.
Colossus Minerals (TSX:CSI,OTCQX:COLUF) announced better-than-expected results from its ongoing underground and surface drilling programs at its 75-percent-owned Serra Pelada gold-platinum-palladium project in Brazil. Highlights include hole SPUD-011, which intersected 33.9 meters grading 3.67 g/t gold, 1.13 g/t platinum and 2.93 g/t palladium. That includes a 5.95-meter zone grading 9.62 g/t gold, 3.41 g/t platinum and 8.46 g/t palladium.
In, addition, hole SPD-175, located in the Lower Limb zone, intersected 1.2 meters grading 273.47 g/t gold, 18.82 g/t platinum and 62.67 g/t palladium. That shows that high-grade mineralization extends beyond a previously-mined pit 150 meters away.
Oil and gas
ExxonMobil (NYSE:XOM) announced this week that it is buying Canada’s Celtic Exploration (TSX:CLT) for $2.86 billion. The deal gives ExxonMobil 545,000 acres in the Montney shale region and 104,000 acres in the Duvernay shale, as well as additional properties in Alberta. Celtic shareholders will receive $24.50 a share and half a share of a new company that will hold assets that weren’t included in the sale. Regulators and Celtic shareholders must still approve the deal.
Exxon said the new properties have an average daily production of 72 million cubic feet per day of natural gas and 4,000 barrels of crude oil, condensate and natural gas liquids (NGLs). As of the end of 2011, Celtic estimated that they contain proven and probable reserves of 128 million barrels. Of that total, 24 percent is crude oil, condensate and NGLs and 76 percent is natural gas.
Royal Dutch Shell (LSE:RDSA,NYSE:RDS.A) and Spain’s Repsol (OTC Pink:REPYY) were among the winning bidders at a Colombian auction of oil and gas exploration blocks this week. The country’s government is auctioning off 115 blocks as it seeks to boost Colombia’s production and expand its reserves. The country is currently South America’s third-biggest oil producer, after Venezuela and Brazil.
Colombia’s oil production has risen 72 percent since 2007, according to Bloomberg. However, its oil reserves of 2.3 billion barrels are smaller than those of Ecuador and Argentina, both of which produce less oil. Two dozen of the auctioned properties contain shale oil and gas. Shell secured the rights to an exploration block in the Caribbean Sea, off the country’s northern coast.
Pan Pacific Copper, the top copper producer in Japan, said that it expects Chinese demand for the metal to rise 4 to 5 percent in 2013 as the country continues to upgrade its infrastructure and transportation networks. Pan Pacific also sees copper trading from $8,000 to $9,000 per metric ton. Three-month copper is now trading at $8,215 on the London Metal Exchange.
Source Exploration (TSXV:SOP) reported that step-out drilling at its Las Minas property in Mexico has intersected high-grade mineralization along strike from what the company had previously discovered in hole LM-11-SC-45. That hole intercepted 2.25 percent copper, along with 15.89 g/t gold and 12.98 g/t silver over 10 meters.
Included in the company’s latest drilling was hole LM-12-SC-54, which includes 4.57 percent copper, 2.16 g/t gold and 80.8 g/t silver over 2 meters. The hole also intercepted 12 meters grading 2.38 percent copper, as well as 2.05 g/t gold and 38.01 g/t silver.
Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.