Alain Corbani, Head of Commodities and Portfolio Manager at Finance SA, takes a look at the current gold situation, and where it might go next.
In June, gold appreciated by 8.76%, closing at US $ 1409 an ounce. Silver Metals rose 5.11% to close at $ 15.22 an ounce. Platinum rose 4.93% to close at $ 830 an ounce. Palladium was up 11.24% and closed the month at $ 1524 an ounce. As of June 25, 2019, net gold speculative positions increased again to 23.6 million ounces, a very strong 170% sequential increase, as a result of a rise in non-commercial long contracts and a decrease in non-commercial short contracts. The US dollar depreciated by 1.66% ending the month at 96.13 (US dollar index) while real interest rates fell 8 basis points. The FTSE Gold Mines index gained 19.13% in Euros while the S&P/TSX Gold Index gained 17.51%.
Exploration results have been very encouraging this month: Corvus Gold Inc. has delineated an extension to its Nevada Mother Lode deposit with impressive drilling results and increasing grades at depth. This asset combined with the adjacent deposit could produce more than 250k oz of gold per year. Marathon Gold Corp. confirmed the continuity of the mineralization at its Leprechaun deposit located in Newfoundland (Canada). IAMGOLD Corporation published drilling results from its Rouyn Gold project located within short distance of its Westwood operation. The Barrick Gold Corp./Acacia Mining saga is ongoing: once again the willingness to negotiate hard on the buyout of the minority shareholders is sending a negative picture with a “soft” offer at a discount to the market price. We hope that common sense will prevail in the interest of both the protagonists and the industry. With the announcement of the refinancing of its short-term debt and the raising of $200 million of additional debt Leagold Mining Corp. reassures the markets on the risk of dilution. On the operation front, Newmont Goldcorp announced the restart of its production at the Penasquito mine in Mexico after facing severe disruptions, while Yamana Gold Inc. announced a more upbeat production guidance at its Jacobina mine while reducing its G&A expenses.
Global accommodative monetary policies and a more constructive technical picture for gold support a bullish momentum for the yellow metal: next stop is at $1500 an ounce.