Golds gains have been helped by comments from the US Federal Reserve suggesting that concerns are rising over the possibility of a renewed economic slowdown. This has helped to reverse some of the dollars recent gains and boost demand for gold, as it makes near-term interest rate rises much less likely.
As a result, physical gold ETFs have performed strongly this week. The $30bn SPDR Gold Trust (NYSE: GLD.US) ETF has risen by 2.5% to $117.49 since last Friday, taking it back into positive territory for the year, with a gain of 1.2% so far in 2014. Over the same period, London-listed Gold Bullion Securities (LSE: GBS) has climbed 2.6% to $117.63, leaving it up by 1.7% on the year to date.
Gold mining update
Egyptian gold miner Centamin (LSE: CEY) climbed 3.2% to 60p in early trade this morning, after the firm reported that gold production rose by 15% to 93,624 ounces during the quarter ended 30 September, compared to the same period last year.
Encouragingly, Centamin maintained its full-year forecast for production of 420,000 ounces of gold, and said that average grades rose during the third quarter and are expected to improve further during the fourth quarter, boosting production levels. As todays release was a production update only, there was no mention of production costs or profit, but Centamin has previously forecast an average cash operating cost of $700 per ounce for this year, which should mean the firm cash flow positive at current gold prices.
Randgold Resources Limited (LSE: RRS) (NASDAQ: GOLD.US) rose by 6.9% to 4,324p during the first hour of trading this morning, as investors reacted to receding expectations for US interest rate rises and the renewed strength of gold. The FTSE 100 gold miner is expected to release its third-quarter update on 6 November, but confirmed last month that the majority of its operations are running as normal, despite the impact of the Ebola epidemic in West Africa.
Centamin currently boasts a forecast P/E of 7.5 and a prospective yield of nearly 2%, which suggests thatthe miner’s shares could offer significant upside potential.
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Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.