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Gold prices dip as jobs outlook improve
The Wall Street Journal’s MarketWatch reported that Gold for June delivery fell to $1,293.40 an ounce, down by 20 cents, on the Commodities Exchange Inc. (COMEX) division of the New York mercantile Exchange.
Reuters said the bullion’s appeal as hedge against inflation and instability was hurt by strong US economic figures, including the jobs market.
It said new applications for US unemployment benefits further decreased, the number hitting a seven-year low last week. This happened amid the largest increase in consumer prices in April, compared to the last ten months.
While gold futures last week rose by 0.3 percent, citing initial gains amid the political uncertainty and unrest in Ukraine, spot gold fell by 0.2 percent to $1,292 after a 0.7 percent drop on Thursday.
SPDR Gold Trust, the world’s biggest gold-based exchange-traded fund, also reflected investor interest as it produced a “modest increase” in flows. Reuters said holdings in the gold trust fund increased by 1.79 tonnes to 782.25 tonnes on Thursday. It is considered the first inflow of the month.
MarketWatch quoted analysts at Commerzbank Commodity Research saying that “real interest rates in the U.S., which are below 0.5% for the first time since last July and keep the costs of holding gold low, should preclude any more pronounced fall in the gold price.”
Higher bond yields have often affected gold negatively because while both are “safe-havens” or can be used to hedge risks, holding gold does not produce income payments.
Nevertheless, Adam Koos, president of Libertas Wealth Management Group told MarketWatch, “Gold continues to act as a pretty good hedge so far this year and I don’t anticipate that will change.”
“So, if you’re starting to get the jitters when it comes to the stock market, bond market, rates, inflation, or our buddy [Russian President Vladimir] Putin, adding a position to gold somewhere along the way probably wouldn’t hurt you,” he said.
This is why mining companies like Premium Exploration, Inc. (OTC: PMMEF; http://finance.yahoo.com/q?s=PMMEF&ql=1) have a lot of allure to investors.
The relative stability of gold assures investors protection from inflation and other untoward events that may drastically affect the economy and the stock market.
Premium Exploration, over the last several months, has offered private placements to raise the company’s working capital for the exploration, drilling and operations in its Idaho Gold Project.
The Idaho Gold Project is a re-emerging mining district found in the vicinity of Elk city, Idaho County in north-central Idaho. The area has had substantial historic mining and exploration activity, dating back to the 1860s, and it is believed to hold bulk tonnage deposits within the 180 square kilometer territory.
Of its six contiguous ones, Friday Zone has showed the most potential with 629,000 indicated and 146,000 inferred gold ounces.
Last March, Premium Exploration CEO John Ryan told Benzinga.com, "The government of the state (of Idaho) is pro-mining. That adds to the premium that exists for gold and other resources in North America. The trend is for investors to now focus on North America. You can certainly see that with the Chinese, who are very active in Canada in the uranium sector, for example. This makes Premium Exploration very attractive to a bigger company."
So far the company has issued 42,197,661 shares and 26,307,636 warrants. It also granted 242,000 options.