Gold’s up but not out of the woods

Gold made its biggest one day gain in over a year, surging 3 per cent to hit a one-month high on Monday, breaking the $US1300 an ounce mark.

After trading at highs of $US1338.91 an ounce yesterday, Gold’s spot price was $US1334.31 an ounce.

But gold isn’t out of the woods just yet, SMH reported possible bearish bets by funds and India’s tightened gold import rules have got analysts suggesting bullion prices will face mounting pressure.

India is the largest gold consumer globally and restrictions in that market have a flow on affect to the rest of the sector.

Gold has already slipped around 20 per cent this year, forcing extensive layoffs across the gold mining sector.

Newcrest Mining has announced workers will be slashed from its Telfer mine in Western Australia as the gold miner continues to implement a raft of cost cutting measures.

“Newcrest, like other gold companies, has experienced significant external economic pressures.  The gold price has fallen significantly (and) the Australian operating cost environment remains high,” the company said in a statement.

In early June Newcrest announced it would continue to cut costs “in response to the change in market conditions”.

Newcrest flagged discretionary spend on projects and studies would be cut, it will move to reduce exploration activities, and is suspending the production of higher cost ounces across all operations.

The company have cut more than 400 jobs from Australia and Papua New Guinea this year.

The lower gold price also took down Focus Minerals who last week announced it will cease its Coolgardie operations at the end of the month.

Suspending mining activities will see 65 jobs cut.

In a statement the company said the Western Australian operation remains too marginal at the current gold price and has suspended all mining and processing operations.

The junior miner halted operations at its Laverton Gold project in May and closed its Mount gold mine in June due to rising costs and falling commodity prices which had made the project unprofitable.

The decision to shut Focus Mineral’s Mount mine saw 22 jobs cut.

One of the world’s largest gold miners, Barrick Gold, has not been immune to gold’s lower prices either; laying off 22 workers from is from its Kanowna operation east of Kalgoorlie-Boulder in June, notifying 35 staff at its global greenfields exploration unit that their positions would be moved from Perth to Canada, and retrenching 32 jobs from its Perth head office.

At the time the company warned its Australian workforce to brace itself for extensive job losses over the coming months.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.