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Weak US Jobs Numbers Support Gold, But Petropavlovsk PLC And African Barrick Gold PLC Outperform

The price of gold remained largely unchanged last week, and while the price per ounce ranged between a low of $1,277 and a high of $1,307, gold ended the week up by just 0.5% at $1,303 per ounce.

goldbarancoinsGold’s biggest move of the week came on Friday, when disappointing US jobs numbers triggered a sharp rise in demand for gold futures, as a hedge against economic uncertainty and the heightened risk of inflation implied by a continuation of US monetary stimulus policies.

However, the long-term outlook for gold is uncertain: in the US, the Federal Reserve appears likely to continue its tapering programme unless the economic data get much worse, while gold demand in China has weakened this year, as the price of gold has risen.

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 1.1% at $125.57. A London-listed alternative, Gold Bullion Securities (LSE: GBS), ended the week up by 0.8% at $125.24. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings rise by 4.2%, while the value of SPDR Gold Trust shares has risen by 6.4%.

Gold mining equities

Last week saw a number of mid-cap gold producers outperform the price of gold by a significant margin. Russian gold miner Petropavlovsk (LSE: POG) climbed 10.1% to 81.5p, despite a fresh round of broker updates rating the firm as a ‘sell’ or ‘reduce’ stock — both ratings which suggest the firm’s shares are likely to underperform the market over the coming months. Petropavlovsk’s annual results are due on 29th April and current consensus forecasts suggest that the firm will report a loss of $0.43 per share.

Another strong performer last week as African Barrick Gold (LSE: ABG), which climbed 4.6% to 263p, possibly in part as a result of an upgrade from brokers Peel Hunt, who increased their rating on the African miner to ‘buy’, following an analyst trip to the firm’s Tanzanian gold mine. Peel Hunt’s analysts, Michael Stoner, said he believed that African Barrick’s cost-cutting had, if anything, improved the sustainability of the firm’s operations and added flexibility to its production.

African Barrick Gold shares are up by 34% so far this year, but the firm's shares are still down by 30% over the last two years, and the miner's dividend yield is a paltry 1%. These figures highlight the importance of timing for investors who are looking to build up a million-pound retirement portfolio -- a topic covered in more depth in the Motley Fool's FREE "Millionaire Report". If you'd like more tips on turbocharging your portfolio to the magic seven figures, click here now.

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