Gold price slides, other metals rebound

As gold prices plunged to a 7-year low, other metal prices continued to rebound from slumps experienced in mid-November.

On Jan. 4, gold was fixed in London at US$328.25 per oz. in the afternoon session, its lowest setting since January, 1986. In New York on the Commodity Exchange, the spot price of gold closed at $328.10, down $4.70 from year-end. Traders blamed the strong U.S. dollar for the slump in gold prices. The strong dollar makes gold an attractive sell for producers in South Africa and Australia. The Australian dollar recently hit a 5-year low of US67.72 cents. Several analysts feel that the next critical level for gold will be $325 per oz. Should the price continue to fall, many high-cost North American producers, such as Homestake Mining (TSE) and Echo Bay Mines (TSE) which remain largely unhedged, may see their share prices continue to weaken. In contrast, nickel, copper and palladium prices will continue to strengthen. On Jan. 5, the price of nickel on the London Metal Exchange (LME) closed up 8 cents at US$2.87 per lb. In mid-November, the cash price for nickel had fallen to US$2.39 per lb. as a result of sluggish world demand and increasing supplies from the Commonwealth of Independent States.

Copper has rallied from a mid-November low of US96 cents per lb. to US$1.09, and palladium continues to be a strong performer closing at US$109 per oz. on Jan. 5.