Gold price tipped to hit new high

Published in the Sunday Mail Adelaide, April 2010

It's gold, gold, gold for Australia as signs build that the precious metal is heading for a new assault on the record price reached in early December.

As Australia's largest producer, Newcrest Mining, pushed its $9.2 billion takeover bid for the nation's No.2 gold company, Lihir Gold, the yo-yoing global spot gold price lifted back above $US1120 per ounce.

CMC Markets analyst David Taylor said many analysts believed the price could surpass the $US1226 mark achieved in early December last year.

"There's talk of interest coming from overseas resource giants as well, which may see further buying activity in the (gold) sector," he said.

Mr Taylor said Newcrest's bid for Lihir took the market by surprise.

Lihir, which rebuffed the approach, soared $1.01 (33.33 per cent) to $4.04 after 278.2 million shares worth $1.1 billion changed hands on Thursday, making it by far the most traded stock by both volume and value.

Newcrest put on 96c (2.93 per cent) to $33.78. If successful, the takeover would create the world's fourth-largest gold company.

Newcrest operates mines in Australia, Indonesia, Papua New Guinea and Fiji; Lihir's major mine is on PNG's Lihir Island and the company also operates in Australia and the Ivory Coast in West Africa.

On Thursday's closing share prices, the two rivals boast a combined market capitalisation of $25.9 billion (Newcrest $16.33 billion and Lihir $9.57 billion).

Meanwhile, the Australian share market closed higher ahead of the Easter long weekend, driven by mining sector gains on the back of firmer base metals prices.

The broader All Ordinaries index added 32.8 points (0.67 per cent) to 4925.9 points - up 20.7 points for the week - while the benchmark S&P/ASX200 index was up 32.2 points (0.66 per cent) at 4907.7.

Wealth Within chief analyst Dale Gillham said he sensed some indecision in the marketplace ahead of the Reserve Bank of Australia's meeting on interest rates this week.

ASX trading resumes on Tuesday with Australian investors looking for direction from Wall Street, which was closed on Good Friday but reopens tomorrow night.

US investors will be digesting the implications of President Barack Obama's upbeat claim that their economy is "beginning to turn the corner".

The US economy created 162,000 jobs in March - more than any time in the last three years - according to Labor Department data released on Friday.

It was not enough to budge the unemployment rate from 9.7 per cent. But Mr Obama declared at a factory in North Carolina: "I have often had to report bad news during the course of this year.

Today is an encouraging day. We learned that the economy actually produced a substantial number of jobs instead of losing a substantial number of jobs.

"We are beginning to turn the corner ...the worst of the storm is over."

US stocks had climbed on Thursday as investors welcomed continued manufacturing growth, as well as signs of economic improvement in Asia and Europe.

The Dow Jones Industrial Average clawed back the previous day's losses, rising 70.44 points (0.65 per cent) to finish at 10,927.07 - a new high for the year.

The tech-rich Nasdaq composite advanced 4.62 points (0.19 per cent) to 2402.58 and the broad-market Standard & Poor's 500 index gained 8.67 points (0.74 per cent) at 1178.10.

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