Gold rose steadily last week, and closed 1.14% higher on Friday at $1,318 per ounce. Gold’s momentum has been sustained over the weekend, and the price of gold for immediate delivery hit $1,328 per ounce shortly after London markets opened this morning.
Recent US economic data — a key influence on the price of gold — has been disappointing, while the unrest in Ukraine has added a measure of uncertainty that has encouraged investors to seek the safety of gold.
However, Goldman Sachs analysts believe these issues are ‘transient’ and are maintaining their view that gold will fall as low as $1,050 per ounce by the end of 2014. Goldman analyst Jeffrey Currie believes that both US and Chinese economic growth will strengthen as the year progresses, dampening demand for gold as a safe haven investment.
The main route by which traders and investors gain exposure to gold is through exchange-traded funds such as the $35bn SPDR Gold Trust (NYSE: GLD.US) ETF, which ended last week up by 1.4% at $126.93. A London-listed alternative, Gold Bullion Securities (LSE: GBS), ended the week up by 1.5% at $126.69. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings rise by 5.0%, while the value of SPDR Gold Trust shares has risen by 7.6%.
Gold mining equities
Last week saw a fairly flat performance from gold mining equities, but amongst the few firms that outperformed the price of gold was Kirkland Lake Gold (LSE: KGI) (NASDAQOTH: KGILF.US), which climbed 3.7% to 195p last week and has gained a further 1.8% in early trading this morning. Kirkland announced its production guidance for the 2014/15 fiscal year last week, revealing that it intends to produce between 140,000 and 155,000 ounces of gold next year, at an average grade of 0.37 ounces per ton.
This will maintain the 18% average annual increase in production the firm has delivered over the last four years, and Kirkland confirmed that it is on course to meet this year’s production guidance of between 120,000 and 125,000 ounces poured and sold (the firm’s financial year ends on 30 April).