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Gold stocks rise as Sydney bullion breaks through

  1. jollyroger

    5,237 Posts.

    Gold stocks rise as Sydney bullion breaks through $US310
    PERTH, April 29 AAP|Published: Monday April 29, 12:23 PM

    The Sydney gold price has broken through $US310 an ounce for the first time since February 2000 as investors push gold stocks higher on the Australian Stock Exchange.

    Sydney bullion opened at $US311 an ounce compared to Friday's close of $US307.275.

    At 1201 AEST, it was trading at $US311.35.

    Local gold stocks have followed the gold price north, with major producer Newcrest Mining Ltd leading the charge, adding 3.9 per cent or 24 cents to be trading at $6.46.

    AurionGold Ltd had gained eight cents to $3.06 while Australian-listed Papua New Guinea miner Lihir Gold Ltd was three cents firmer at $1.35.

    Mid-tier producer Croesus Mining NL had also add four cents to 66 cents while gold and tantalum miner Sons of Gwalia was down six cents at $6.24.

    The fall in Sons of Gwalia's share price followed strong gains last week after it advised the market that tantalum deliveries were not expected to be affected by a legal dispute involving one of its customers.

    The Sydney gold price has surged from $US298.55 on April 16 as tension in the Middle East, a reduction in producer hedging and concerns about the Japanese banking system combine to drive it higher.

    Eagle Research managing director Keith Goode said short covering was also pushing the price north.

    "The short covering positions are always a hotly debated area as to just how big it is, it could be anything between 2000 and 4000 tonnes."

    Mr Goode said the higher gold rises, the less inclined producers will be to forward sell, auguring well for further price increases.

    "The higher it rises, the gold producers themselves are going to be more inclined to reduce their hedging I think.

    "I can't see anyone wanting to hedge when the gold price is doing this and they would be crucified in the market if they did.

    "As far as I'm concerned it should be heading towards $US325, that's the long term equilibrium value price for it."

    In New York on Friday, Comex June gold futures hit fresh highs of $US312.50 per ounce before ending at $US312.10, up $US3.50 on the day and $US9.30 per ounce above where prices opened the week.

    Offshore analysts said tensions in the Middle East, a weaker US dollar against other major currencies and an uncertain outlook for US equities helped pave the way higher for gold.

    The price was also buoyed by speculative fund buying.

    Analysts also noted good levels of producer hedge buybacks as miners sought to withdraw their previously arranged forward-price commitments in expectation of being able to secure better prices later in the year.

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