Gold Prices Sideways Amid M&A

Gold has been trading mostly sideways this week, closing at $1,117 per ounce for spot delivery on the London Metal Exchange, a marginal 0.5% drop compared with $1,123 last Friday. Prices dropped to $1,108.4 midweek but recovered, after registering gains for a second day Thursday as a weaker dollar spurred demand for the metal.

Experts reckon that the metal would continue to trade sideways next week as well. According to a Bloomberg survey of 19 traders, investors and analysts, seven forecast higher prices, three were neutral and nine forecast that prices would drop next week.

Rising gold prices this year have been driving a wave of acquisition activities in the sector with at least three major deals being announced this week alone.

Shares in Kinross Gold(KGC) were down 0.44%, closing at $17.99 Thursday after the company announced the proposed acquisition of Underworld Resources(UW) for $139.2 million, or $2.62 per share.

Kinross already holds an 8.5% stake in the company and Thursday's offer represents a 36% premium over Underworld's closing price of $1.93 on Wednesday. Shares in Underworld subsequently gained 33.16%, closing at $2.57, following the announcement.

Earlier this week, Apollo Gold(AGT) announced Tuesday the acquisition of Linear Gold for C$102 million. Following the deal, the combined company will have total reserves of approximately 2.3 million ounces of gold in Canada.

Meanwhile Newmont Mining(NEM), the world's second largest gold producer, said Monday that it might pursue operations into countries it previously believed were too politically risky. The announcement comes after the company sold its interest in the Amulsar Gold Project in Armenia last week to its partner Lydian International for around $25 million.

"We continue to evaluate where we want to be in the world, and we want to be where the most valuable gold and copper deposits are," Chief Executive Richard O'Brien said at the Reuters Global Mining and Steel Summit.

Mark Cutifani, CEO of AngloGold Ashanti(AU), the world's third largest gold producer, said Monday the company could split its global business to increase valuation and enhance shareholder returns. Speaking at the Reuters Global Mining and Steel Summit, Cutifani also said the group was eyeing an acquisition as it wants to grow its footprint in the Americas.

Shares in Barrick Gold(ABX), the largest gold producer, closed at $40.05, having lost 1.55% this week. The company faced the risk of losing its mining license for the $3 billion Reko Diq gold-copper project in Pakistan, Reuters reported.

However, Chief Executive Aaron Regent told the news agency Tuesday that he is optimistic the company can reach an agreement to develop the project,which is jointly owned by Barrick and Chilean copper company Antofagasta.

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