Gold performed strongly last week. The price of gold for immediate delivery ended the week up by 1.5% at $1,399 per ounce, after gold rallied strongly on Friday, when a fall in US new home sale figures persuaded investors that the Federal Reserve might be less likely to cut back on stimulus spending in September.
Of course, the only practical way for most private investors to invest in gold is through exchange-traded funds. The largest gold ETF, the $39bn SPDR Gold Trust, ended last week 2.2% higher and closed yesterday at $135.45, while London-listed Gold Bullion Securities (LSE: GBS) climbed 1.6% to end the week at $134.26 but did not trade yesterday due to the bank holiday. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 14%, while the value of SPDR Gold Trust shares has fallen by 17%.
Gold’s big movers
It was a quiet week for mining company news last week, but several mid-tier gold producers made strong gains regardless:
Centamin (LSE: CEY) climbed 8.2% to 39.8p last week, as the surging gold price help lift the Egyptian gold miner’s share price. Centamin is still awaiting the outcome of a legal case questioning the validity of the mining licence for its Sukari gold mine, but recently reported record gold production of 93,624 ounces for the first half of the year, along with a 23% increase in half-year earnings per share.
Petropavlovsk (LSE: POG) gained 7% to 126p last week as steady buying lifted the stock from a Tuesday low of 109p to Friday’s peak of 127.5p. The rise in the price of gold is good news for Petropavlovsk, which is currently implementing a cost-cutting programme in an effort to return to profitability, now that gold prices have fallen away from record highs. The firm is targeting a 9-12% reduction in cash operating expenses in the second half of this year and a $6m drop in general and administrative costs for the full year.
African Barrick Gold (LSE: ABG) rose 4.7% to 166p last week after the firm announced that it had appointed a new chief executive officer, Bradley A. Gordon. Gordon will succeed outgoing CEO Greg Hawkins, who the firm says has “resigned to pursue other opportunities”. African Barrick’s share price has fallen by 62% over the last twelve months, so investors will be hoping that Gordon’s 30 years of gold mining industry experience will help him turn around the firm’s fortunes.
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> Roland does not own shares in any of the companies mentioned in this article.