mineral exploration project – commodity prices – mining stock- trade and market

The gold price hovered near unchanged, consolidating after its recent five day winning streak that pushed the price of gold well above the $1,100 level it had been trading near for the past six weeks. The rally in the gold price has provided a tailwind to the gold stocks, which have also moved higher for five consecutive trading sessions. Goldcor, Barrick Gold, and Newmont Mining, the three most widely held gold stocks, have appreciated 11.4%, 12.5%, and 14.6%, respectively, in just the last three weeks. Stronger gold prices have also buoyed the price of silver, which has rallied 11.3% over the past three weeks to $17.31 per ounce.

Economic data released this morning had a negligible immediate impact on S&P 500 stock futures or the gold price as the figures came in largely in-line with market expectations. Initial jobless claims were reported at 469,000 and unit labor costs did declined in the fourth quarter at a rate of 5.9%. Meanwhile, nonfarm productivity surged at a 6.9% annual rate.

Declining labor costs and the corresponding rise in productivity have been one of the key drivers of higher profit margins for corporations over the past six months. This expansion of profit margins has helped fuel the 12-month surge in stock prices. Whether capital spending returns and how quickly companies begin re-hiring are two factors being hotly debated among economists. The answers could determine if there are further legs to the current rally in both stock and commodity prices.

Gold mining producers saw a similar rise in their profit margins in the fourth quarter as the average gold price in Q4, at $1,101 per ounce, was 14.5% higher than in the previous quarter. Earnings continue to be released from gold mining producers, and the results have prompted many analysts to increase earnings projections and raise price targets. The gold price will be the crucial factor moving forward into 2010 for the gold producers, but the rise in by-product credits such as copper and silver is also supporting their bottom lines. With input costs stabilizing after many years of escalation, the gold stocks’ leverage to the gold price is rising.

After a muted beta to the gold price over the past few years, 2010 may be the year that the gold stocks as a group begin to move at two or even three times the rate of change in the gold price.

Find More Other News : Barrick Gold - Commodity Prices - gold mining producer - gold price - Newmont Mining - stock prices