Positive Economic Factors Boost Gold PricesWhile gold is still parked below $1,300 per ounce, today was a good day for the yellow metal. It is up due to several factors, including speculation that the Federal Reserve will not raise interest rates any time soon. Minutes from Wednesday’s meeting show that while the central bank did lay out some groundwork to pull back from the stimulus package, no decisions were made. 

News that India’s central bank has backed off on some of its rules for importing gold also supported the yellow metal today. The central bank is allowing private trading companies to bring the metal into the country. Traders are speculating that with the eased import regulations, demand for gold from India will be seeing a boost.

“We do know that there is a wedding season in India and relaxing these import rules will break the premium price for the metal in the country, which could lift up the demand,” said Naeem Aslam, chief market analyst at AvaTrade. India’s wedding season runs from September to December.

Meanwhile, Chintan Karnani, chief market analyst at Insignia Consultants in New Delhi, told MarketWatch that “this is the best chance this year for gold to rise to $1,400 in the very short term.”

China, the world’s other top gold consumer, also had a hand in gold’s positive performance today, with some positive figures coming out of the country’s preliminary HSBC manufacturing purchasing managers’ index. The May reading of 49.7 is the best in five months.

On Thursday, gold recouped its losses from the previous day, rising $3.50, to $1,296, before settling for the day at $1,293.

Another acquisition

The market has been seeing more mergers and acquisitions, meaning mining companies are getting more comfortable with where gold prices are sitting. In the wake of Osisko Mining’s (TSX:OSK) deal with Agnico Eagle Mines (TSX:AEM) and Yamana Gold (TSX:YMI), Canadian gold miner Rio Alto (TSX:RIO) has announced that it will buy Sulliden Gold (TSX:SUE) in a deal worth $300 million, creating a Peru-focused gold miner that will claim the number-five spot on the list of the world’s top gold producers.

The transaction will see Rio pay 0.525 of one Rio Alto share for each outstanding share of Sulliden. The offer values Sulliden at C$1.12 per share, a 43-percent premium on Tuesday’s closing price. The new company will maintain Sulliden’s interest in the East Sullivan property in Val d’Or, Quebec, and will also combine Rio’s currently producing, low-cost La Arena gold oxide mine in Peru with Sulliden’s low-cost, scalable Shahuindo project.

The newly formed company will have a near-term production capacity of 300,000 ounces per year of gold and the ability to increase output.

Company news

On Thursday, Niogold (TSXV:NOX) announced the start of a 1,400-meter drill program at the H zone on its Malartic H property in Val d’ Or, Quebec. The H zone has an extent of roughly 1 kilometer and is open both on strike and at depth. The company’s goal is to confirm the geological continuity of the zones and start building ounces. The gold-bearing H zone is located near the Marban Block project, where the company already has three deposits. Niogold hopes that the H zone will be the fourth.

Manitoba-focused Mega Precious Metals (TSXV:MGP) released the results of six additional drill holes from the winter program at the Monument Bay project in Manitoba. The company’s program continues to define near-surface, high-grade gold and gold-tungsten structures with a broader gold mineralized zone. Included in the company’s results is an intersect of 61 meters of 3.44 grams per tonne (g/t) gold, including 6.64 g/t gold over 30 meters. Results from this hole are among the highest gold intercepts with multiple occurrences of visible gold in the Twin Lakes deposit.

Also releasing results from a 2014 drill program was Corvus Gold (TSX:KOR), whose assay results extend the high-grade veins north and south at the Yellowjacket deposit on the North Bullfrog property in Nevada, while also adding the discovery of a new vein. The company’s first hole drilled in 2014, NB-14-391, located on the northern extension of the main Josh Vein, intersected 17.5 meters of 12.77 g/t gold and 62 g/t silver. The hole was a 30-meter step out to the north from the farthest northern holes previously drilled at the Josh Vein.

The company’s newly discovered West Vein structure, which includes hole NB-14-384, intersected 4.5 meters of 17 g/t gold and 150 g/t silver 50 meters south of NB 14-380. According to Corvus, stockwork surrounding the West Vein continues to return broad zones of gold and silver mineralization.

Brazil Resources (TSXV:BRI) has submitted all the required documents to Brazil’s Department of Mining Production in order to maintain its mining license for the Cachoeira project in Para State.

“The completion of this DNPM documentation is necessary to support the Company’s right to mine the Cachoeira gold deposit and we expect it to form part of the foundation for a future preliminary economic assessment on the project,” said CEO and President Stephen Swatton in a statement.

Canoe Mining Ventures (TSXV:CLV) started a 10-hole drill program on its wholly owned Iron Lake gold project near White River, Ontario. The company’s 1,250-meter program will focus on the Iron Lake deformation zone, which spans the entire property. Canoe will specifically target IP anomalies detected in 2012.

Canamex Resources (TSXV:CSQ,OTCQX:CNMXF) announced further results from its core drilling program at the Bruner gold project in Nye County, Nevada. The company intersected 70.1 meters grading 3.17 g/t and 1.5 meters grading 102 g/t with core hole B-1404C. With the results, the company has confirmed that there are high-grade zones within the historic resource area that have not yet been identified or adequately tested.

 

Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.