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Gold has traded in a range between $1,307 and $1,329 so far today but weakened over the last 30 minutes after 2 new reports showed the pace of growth in the U.S. manufacturing sector has accelerated, though construction spending fell…as of 7:15 am Pacific, bullion is down $10 an ounce at $1,313…Silver is off 9 cents at $19.72…Copper is up 6 cents to $3.17 after an official gauge showed Chinese manufacturing expanded in July, exceeding expectations….Crude Oil has climbed $2.52 a barrel to $107.55 while the U.S. Dollar Index is up half a point at 82.19…

The Federal Reserve left the future timing of U.S. monetary policy changes “up in the air” yesterday, and we get the distinct impression they may not begin scaling back their bond-buying program in September as many pundits have been expecting…economic growth in the U.S. continues to be lackluster (the Fed actually slightly downgraded its outlook for economic growth in the statement it released at the conclusion of its 2-day meeting yesterday) and it also noted that inflation is below its target level…Gold strengthened as a result late in the day to close above support at $1,320 after falling as low as $1,305…bullion ended a 3-month slide and closed 7.3% higher for July…August-September are typically strong months for Gold, as physical buying in the Asian markets ramps up for the wedding season and other events, so despite this morning’s weakness there’s clearly an excellent opportunity for a push through resistance at $1,350 in the coming weeks which would give the Venture and producers a much-needed lift…the Crude Oil chart remains very bullish and could provide important underlying support for bullion through the remainder of the summer…of course the all-important U.S. non-farm payrolls report is due tomorrow and that could certainly be a market-moving event in both the Gold and equity markets…

Mixed News From China’s Manufacturing Sector

China’s manufacturing sector managed to stay in expansionary phase in July, according to official government data on Thursday, defying forecasts of a contraction…the official manufacturing Purchasing Managers’ Index (PMI) rose to 50.3 in the month from 50.1 in June, and better than a Reuters consensus estimate of 49.9…the key 50 threshold separates expansion from contraction…the official PMI data came even as a private gauge of manufacturing activity showed a far more downbeat picture…the final reading of the HSBC China PMI, also released on yesterday, fell to an 11-month low of 47.7 in July from 48.2 in June, in line with its flash estimate released last week…official Chinese PMI is more skewed to larger and state-owned companies while the HSBC figure reflects smaller companies, hence the divergence…smaller companies in China are having a more difficult time at the moment…expect more stimulus out of China, which is also bullish for commodity markets…Chinese government officials said yesterday they will maintain a steady economic growth pace despite “highly complicated” conditions at present…the statement came after a meeting of the Chinese politburo…

ECB Confirms Former Guidance, No Surprises From Bank Of England

The Bank of England left the size of its bond-buying program unchanged today and held its key lending rate at a record low of 0.5%, where it has stood since March 2009…the central bank’s Monetary Policy Committee left its asset purchases, the centerpiece of its quantitative-easing strategy, at 375 billion pounds ($570 billion)…meanwhile, ECB President Mario Draghi repeated this morning that interest rates would remain at present or lower levels for an extended period of time, a move the bank hopes will support a recovery in the euro zone later this year and in 2014…“The Governing Council confirms that it expects the key ECB rates to remain at present or lower levels for an extended period of time,” Draghi told a press conference after the bank left its main interest rate on hold, as expected, at a record low of 0.5%”…Draghi’s forward guidance, first issued last month, surprised financial markets, and was in stark contrast to the ECB’s tradition of never pre-committing on future rate decisions…

Today’s Markets

Investors cheered China’s official PMI figure and drove the Shanghai Composite 35 points higher overnight to close at 2029…all Asian markets were strong, led by Japan’s Nikkei average which climbed 337 points or 2.5% to close at 14006…

European shares are higher in late trading overseas European shares were higher in early afternoon trade on Thursday as investors reacted to earnings news, economic data and rate decisions from the ECB and the Bank of England…

Markets are robust in New York and Toronto today…as of 7:15 am Pacific, the Dow has surged 143 points to 15643…initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 326,000, the lowest level since January 2008, the Labor Department reported this morning…economists polled by Reuters had expected first-time applications to rise to 345,000 last week…the TSX is up 129 points while the Venture has added 4 points to 921…Zenyatta Ventures (ZEN, TSX-V) has recovered after bouncing strongly off chart support at $3.75, its early trading low…it’s off just a few pennies at $4.06 as of 7:15 am Pacific…

TSX Gold Index Updated Chart

The TSX Gold Index continues to display some bullish undertones, though investor patience is critical as it could be a few weeks yet before this Index really starts to gain traction…for July, the Gold Index was up 7.6% vs. Gold’s 7.3% increase and the Venture’s more modest 4% gain…the Gold Index appears to be on track for a positive Q3 after successive quarterly declines of 13%, 16% and 33%…the recent bearish trend on this 5-year weekly chart is clearly weakening as shown by the ADX indicator, and the strong support band between 150 and 160 has held…lately, there has been excellent support at 180…what we’d like to see is a reversal to the upside in the 50-day moving average (SMA) – same with the Venture – but that could take a few more weeks to unfold…if and when that occurs, the stage is set for a strong move to finish the quarter…the Index is currently down a point at 181…

Barrick, Kinross And Yamana Report Challenging 2nd Quarters

Barrick Gold Corp. (ABX, TSX) posted a 2nd-quarter loss today due to an $8.7 billion impairment charge largely on account of the recent slump in Gold prices…the world’s largest Gold producer reported a loss of $8.56 billion, or $8.55 per share, compared with a profit of $787 million, or 79 cents per share, in the year-ago quarter…excluding 1-time items like the impairment charge, earnings were 66 cents a share…revenue fell 1.3% to $3.2 billion…ABX is up over 30 cents through the first 45 minutes of trading this morning…

Kinross Gold (K, TSX) has posted a $2.4-billion impairment charge because of lower Gold price assumptions and a previously announced loss on Fruta del Norte (Ecuador) that the miner abandoned a few months ago…the latest charge brings Kinross’s writedowns to $8-billion over the past 18 months, exceeding the miner’s current market capitalization of about $6.1-billion…Kinross‘ all-in sustaining costs were $1,072 an ounce in Q2 vs. $970 in the 2nd quarter of 2012, and they are continuing to rise…Kinross expects to be within its 2013 forecast guidance for production (2.4 million to 2.6 million attributable AuEq ounces), production cost of sales ($740 to $790 per AuEq ounce) and all-in sustaining costs ($1,100 to $1,200 per Au ounce sold)…the company has reduced its 2013 capital expenditure forecast to approximately $1.45-billion from $1.6-billion…Kinross has also suspended its upcoming semi-annual dividend…it’s down sightly through the first 45 minutes of trading…

Yamana Gold (YRI, TSX), which also reported yesterday, is doing much better than Kinross in terms of its all-in sustaining costs and other factors…Yamana suffered a net loss of $7.9-million in Q2 on revenues of $430.5 million vs. earnings of $43 million on revenues of $535.7 million during the same period last year…all-in sustaining costs during the latest quarter were $950 per Gold equivalent ounce on a co-product basis, a 6% or approximately $64 per Gold equivalent ounce reduction from Q1 this year…based on its assessment of potential impairments, the company has concluded that there are no impairment charges in respect to its mineral interests as of June 30 this year…Yamana believes that adverse changes in metal price assumptions will be partially offset by other inputs that will result in lower costs and updated mine plans…the company initiated a wide ranging cost-savings program in the 2nd quarter of this year…the stock, however, is off 58 cents to $10.15 as of 7:15 am Pacific…

GoldCorp Updated Chart (G, TSX)

One producer that appears to be looking better these days (at least that’s what the chart is saying) is GoldCorp (G, TSX), despite the fact it also reported a tough 2nd quarter recently which included a $1.9-billion writedown…the writedown helped lead to a 2nd quarter net loss of $1.93-billion or $2.38 a share, compared with net income of $268-million or 26 cents a year ago…profit excluding the writedown and other one-time items was 14 cents a share, trailing the 23-cent average of 19 estimates compiled by Bloomberg…sales fell 18% to $889-million for the quarter, missing the $1.15-billion average estimate…still, for what it’s worth, equities research analysts are mostly bullish with regard to Goldcorp at the moment…3 analysts have rated the stock with a sell rating, 4 have assigned a hold rating and 10 have issued a buy rating to the company’s stock…GoldCorp currently has a consensus rating of “Hold” and a consensus target price of $35.74…below is a 10-month weekly chart from John which shows an encouraging basing pattern…GoldCorp is down slightly in early trading today…

Pacific Potash (PP, TSX-V) Update

Pacific Potash (PP, TSX-V) came out swinging this morning, defending its unique position in the Brazilian market as it gets set to commence a drill program at its highly prospective Amazonas Potash Property, and stating it’s “in agreement with a statement made by K+S Aktiengesellschaft that the pricing for potash fertilizers being spread by the media are unjustified and that they do not reflect the current supply-and-demand situation in the potash market”…(the K+S Group is one of the world’s leading suppliers of standard and speciality fertilizers)…

Pacific Potash also stated this morning that it “is of the opinion that it is uniquely positioned in the Brazilian market, having a substantial logistical cost advantage, being located within a few hundred kilometres of the end-user for its product. Brazil is the third-largest consumer of potash globally and is also the world’s fastest-growing potash market, as its fastest-growing and largest industry is agribusiness. The country has an estimated 30 per cent of the world’s remaining arable farmland and is poised for long-term growth within this sector. The Brazilian National Fertilizer Association (ANDA) has released data showing that 2012 potash consumption increased (9.3 per cent year over year) to a record 8.1 million tonnes of potassium chloride (KCl), 93 per cent of which was imported. The country currently has only one operating potash mine, the Taquari-Vassouras mine in the Sergipe basin, which produces approximately 700,000 tons of KCl per year (7 per cent of Brazil’s demand). Presently, the cost of shipping, freight, importation duties and taxes can cost well over $100 per ton in addition to the potash spot price. A project located in the Amazonas potash basin supplying to the N-P-K blending plants locally in Brazil would incur shipping and logistical cost of in the neighbourhood of $30 to $50 per ton”…

Macro Enterprises Inc. (MCR, TSX-V)

Macro Enterprises Inc. (MCR, TSX-V) is a simple story and it’s making money, 2 reasons why MCR has been an island of safety for a Venture stock (and a market leader) since late last year…MCR announced superb Q1 earnings near the end of May…since late last year, it has risen in Zenyatta-like fashion…Macro specializes in construction and maintenance of small-to mid-inch pipelines, facilities and gathering systems…operations are centered in Fort St. John, B.C., with a satellite office located in Hinton, Alberta…Macro maintains one of the most modern fleets of heavy equipment in the industry…yesterday, MCR hit a new all-time high of $4.40 where it’s trading at as of 7:15 am Pacific…below is an updated 6-month weekly chart from John…

Happy Times Coming For Happy Creek Minerals? (HPY, TSX-V)

Another interesting exploration in British Columbia we’re keeping a close eye on is Happy Creek Minerals‘ 165-sq. km Fox Tungsten Property near 100 Mile House…tungsten is a very strategic metal and prices have been on a steady rise since March…a 1,200 metre drill program (12 to 15 holes) began in mid-July at Fox, a “unique and attractive discovery that has produced some of the best tungsten drill results in the Western world,” according to President David Blann…the geological mapping and results from drilling in 3 areas prior to this year’s program suggest a main calc silicate/skarn unit hosting variable concentrations of tungsten of around 25 to 40 metres in thickness and approximately 2 kilometres by over 1 kilometre in dimension…multiple (stacked) mineralized zones may occur…positive values of tungsten occur in rock, stream sediment, soil and drill core in a 10-kilometre-by-3-kilometre area at Fox, so there seems to be plenty of exploration upside at this large property…HPY closed yesterday at 17 cents…trading has been light in July but activity could pick up this month in anticipation of results…the technicals have been strengthening somewhat recently as well as John showsin this 20-month weekly chart…

Note: Jon holds a share position in HPY.