It was quite a week for the gold price.
The yellow metal continued its record-breaking streak early in the period, touching the US$3,500 per ounce level for the first time, but then saw a sharp pullback, even dropping briefly below US$3,300.
What’s behind gold’s latest moves? Market watchers have pointed to US President Donald Trump’s comments about Federal Reserve Chair Jerome Powell as the trigger for its latest spike.
In a Truth Social post on Monday (April 21), Trump said there could be a ‘SLOWING of the economy’ unless Powell — who he referred to as ‘Mr. Too Late’ — lowers interest rates.
Trump has criticized Powell heavily in recent days, saying last week that his ‘termination cannot come fast enough!’ That statement reignited discussions on whether Trump is able to fire Powell — Powell has said it can’t be done, and there isn’t any precedent since no president has ever tried to oust a Fed chair.
For now, the tension has subsided — Trump walked back his harsh words about Powell on Tuesday (April 22), saying he doesn’t intend to fire him, but still wants to see rate cuts.
‘I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates’ — Trump
Bullet briefing — Barrick to sell Donlin stake, CMOC to buy Lumina
Barrick to sell Donlin stake
Barrick Gold (TSX:ABX,NYSE:GOLD) has reached an agreement to sell its 50 percent stake in the Donlin gold project to affiliates of Paulson Advisers and NOVAGOLD Resources (TSX:NG,NYSEAMERICAN:NG).
The major gold miner will sell its interest in Donlin for US$1 billion in cash, with Paulson providing US$800 million and NOVAGOLD contributing the other US$200 million. Once the deal closes, Paulson will have a 40 percent interest in Donlin, while NOVAGOLD’s stake in the asset will rise from 50 percent to 60 percent.
Barrick President and CEO Mark Bristow said Donlin is an asset that ‘might be better suited in the hands of others,’ adding that the company is exiting at an ‘attractive valuation.’
While Donlin is one of the world’s largest gold projects, it is located in Alaska where infrastructure is scarce. At the same time, Barrick is looking to hone in on tier-one assets and boost its copper exposure.
Thomas Kaplan, chair of NOVAGOLD, said in a conference call after the sale was announced that his company ‘did not see eye-to-eye on a couple of things’ with Barrick, including the timing for a feasibility study for Donlin and the amount of drilling to conduct at the property.
Paulson Advisers, a longtime NOVAGOLD shareholder, is chaired by John Paulson, who is known for betting against the housing market during the great financial crisis.
In an interview with Bloomberg this week, the American billionaire said gold is ‘moving to a new level of valuation’ as central banks continue to buy.
CMOC to acquire Lumina
In other gold M&A news, CMOC Group (OTC Pink:CMCLF,HKEX:3993,SHA:603993) has agreed to buy Lumina Gold (TSXV:LUM,OTCQB:LMGDF) in a transaction worth C$581 million.
The all-cash deal will see CMOC pay C$1.27 per Lumina share.
Lumina is focused on its Cangrejos project, which it says is the largest primary gold deposit in Ecuador. A 2023 prefeasibility study outlines a 26 year mine life, with average annual payable production of 371,000 ounces of gold, plus average annual payable by-product output of 41 million pounds of copper.
‘After advancing the Cangrejos project for over 10-years and taking it from no defined resources to being poised to be one of the largest gold projects globally, the Lumina Group is excited for the transition of the Cangrejos project to CMOC,’ said Marshall Koval, CEO of Lumina Gold.
Well-known mining industry figure Ross Beaty is Lumina’s largest shareholder, while CMOC is a major producer of metals like molybdenum, tungsten, copper and cobalt.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.