Gold Review: Fed’s Firm Position On Taper Triggers Gold Sales, Centamin PLC Reports Production Up 34%

Gold Bullion Securities Limited (LON:GBS) and SPDR Gold Trust (ETF) (LON:GLD) were hit by Fed Chair Janet Yellen’s comments.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

goldbarancoins

Gold pulled back sharply from recent highs last week, after Janet Yellen, the new Chair of the US Federal Reserve, said that the Fed’s bond-buying stimulus option could end as soon as this year, and that interest rates might start to rise as little as six months later. Gold ended the week down by 3.5% at $1,334 per ounce, ending recent hopes that a new bull market for gold might be developing.

US government figures for the week to 18 March show that bullish sentiment amongst futures investors hit its highest level since November 2012, but last week’s decision by the Fed to continue tapering its stimulus operations and cut monthly bond purchases by $10bn to $55bn caused investors to scale back their holdings in gold stocks.

Selling pressure pushed down the share prices of gold funds such as the $35bn SPDR Gold Trust (NYSE: GLD.US) ETF, which ended last week down by 3.2% at $128.47. A London-listed alternative, Gold Bullion Securities (LSE: GBS), ended the week down 3.5% at $128.19. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings rise by 11.3%, while the value of SPDR Gold Trust shares has risen by 8.4%.

Meanwhile, gold analysts at both Goldman Sachs and Societe Generale reiterated their view that gold may yet fall below $1,000 per ounce this year.

Gold mining update

The majority of gold mining shares drifted lower last week, reflecting the fall in the price of gold. Firms including Randgold Resources, Petropavlovsk and African Barrick Gold all tracked the gold price lower.

However, shares in Centamin (LSE: CEY) rose by 3.3% in early trading this morning, following the publication of the firm’s results. The Egyptian gold miner reported a 36% increase in gold production in 2013 and earnings per share of $0.17, placing it on a P/E rating of just 5.5. In today’s announcement, Centamin’s chairman, Josef El-Raghy, promised that the company would “make clear its intentions with regard to a policy for returning capital to its shareholders” in 2014 and re-iterated his confidence that the legal challenge to the firm’s mining licence would be overturned. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland does not own shares in any of the companies mentioned in this article.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »