Gold benefits from stumbling US dollar

Gold prices saw major gains over the May 31-June 6 report period as the U.S. dollar finally showed some weakness, especially against the Euro.

Beginning on June 2, gold bugs enjoyed a three-day short-covering rally that closely matched the Euro’s rise and saw gold peak above US$290 per oz. on June 6. Over the week, the yellow metal shot up US$14.70 to settle at a London morning fix of US$286.95 per oz. on June 7, by which time hedge selling was seen from Australian producers.

The rest of the precious metals also basked in higher prices: silver was up 15 to US$5.15 per oz.; platinum gained US$18 to reach US$566 per oz.; and palladium jumped US$55 to US$625 per oz.

Canada’s major gold producers all advanced in step with gold: Barrick Gold rose 80 to $28.75; Placer Dome gained $1.10 to $13.80; Kinross Gold edged up 16 to $1.58; TVX Gold rose 12 to 91; and Cambior was up 2 to 82. Only Franco-Nevada Mining was off, falling 20 to hit $18.30.

Nickel had an extremely volatile week. Prices fluctuated wildly ahead of June 7’s option declaration on the London Metal Exchange and players dove to cover short positions in advance of expected price hikes.

All of Canada’s nickel miners were hit: Inco was down 25 to $24.30 as it announced it would go ahead with a US$33-million expansion of its McCreedy East nickel mine in Sudbury; Falconbridge declined $1.50 to $20.50; and Sherritt International dropped 15 to $4.55.

The remaining base metal majors were a mixed bag: Noranda was down 20 to $14.65 as 310 employees at its Gasp smelter in Quebec accepted a new 3-year collective agreement; Rio Algom sank $1 to $17.25; Teck‘s B shares were up 10 to $10.50; Boliden declined 5 to $1.95; Cominco retreated 5 to $21.15; and Breakwater Resources crept up 10 to $3.

Turning to the juniors, Pangea Goldfields fell 45 to $4.70 as it announced the selling of up to $9.9 million in special warrants priced at $4.50 apiece through brokers Sprott Securities and Loewen Ondaatje McCutcheon. Pangea has had many exploration successes in Tanzania’s Lake Victoria gold district.

So much for SouthernEra Resources‘ plan to put charismatic founder Christopher Jennings out to pasture. Angry shareholders attending the company’s annual meeting in Toronto on June 6 took the market by surprise by replacing the entire board of directors, except for Jennings and Patrick Evans. The new team of directors has already cancelled a proposed relocation to Denver and a management shake-up is expected soon. SouthernEra closed up 5 at $1.30, only to rise another dime on June 7.