Gold Price and Production Drop

Anglo Asian Mining PLC said on Thursday that its output of gold equivalents and the gold price droped in the second quarter compared to the same period last year.

gold price

The mining business with an emphasis on Azerbaijan reported output of 15,052 gold-equivalent ounces for April through June, a decrease from 16,740 ounces the previous year. Output of gold decreased to 10,866 ounces from 12,340. 

Anglo Asian said that they anticipate starting production at Vejnaly and the Hasan vein at Gosha in the second half, and starting production at a significant new mine at Zafer in 2023.

Anglo Asian Mining PLC is a holding company with its headquarters in the UK. The Company offers management and support services to its operational subsidiary R.V. Financial Group Services LLC (RVIG). 

The Company, along with its subsidiaries, is engaged in the exploration and development of gold and copper projects in the Republic of Azerbaijan. 

The flagship project, the Gedabek gold/copper mine, which is situated in 300 square kilometers and produced 52,068 ounces of gold, is also operated by the Company. 

Mining activities and exploration locations are its two main business divisions.Both parts are found in the country of Azerbaijan. It has a potential portfolio of 1,962 square kilometers worth of gold and copper assets that are in various stages of development. 

Ordubad Contract Area, an area of 462 square kilometers, is situated in the Republic of Nakhchivan, Azerbaijan. The 300 square kilometer Gosha Contract Area is situated 50 kilometers northwest of Gedabek in western Azerbaijan.

For the fiscal year that concluded on December 31, 2021, the Company generated 64,610 gold equivalent ounces (GEOs). 

The Company completed a private placement in December 2021 to acquire 19.8%. representing Libero Copper & Gold Corporation (“Libero”). The deal was finished in January 2022. In addition to owning or having the option to purchase various copper exploration projects in North and South America, Libero is listed on the TSX Venture Exchange in Canada. These properties include Mocoa in Colombia, one of the biggest untapped copper-molybdenum deposits in the world.

The Government of Azerbaijan adopted changes to its Production Sharing Agreement on July 5, 2022, awarding Anglo Asian three new concessions covering a combined 882 square kilometres of land. This includes the Soviet-classified Garadagh porphyry copper deposit, which contains about 300,000 tonnes of copper. The addition of these concessions completely changes Anglo Asian’s asset portfolio and supports the company’s strategic goal of becoming a mid-tier copper-focused miner.

gold price dropped more than 2 %

The previous week, the gold price dropped more than 2 per cent and will fall even lower below the $1,800 support level as demand for the non-yielding asset was dampened by a significant rise in the dollar and increasing interest rates. 

The dollar touched its highest level in about two decades and strengthened its position as the favored sanctuary for investors concerned about a future recession, making the safe-haven metal less desirable for foreign purchasers.

After the US CPI report came, traders are now banking on 175 basis points (bps) of rate increases by September, with some anticipating a 75 bps increase.

Following the release of the inflation figures, gold fell to its lowest level in a month, but later rose as economic worries gained attention. This week has seen an increase in volatility, with bullion reversing a dramatic decline from a one-month high reached during the Asian session. 

The swift unwinding in gold emphasizes the present struggle between the factors that drive its price, with strong inflation being fought off by bets on aggressive policy actions, according to a report from JP Morgan.

An optimistic gold outlook would need greater evidence that economic expansion is faltering due to increasing inflation, the paper continued. 

This week, dramatic tightening measures taken by central banks throughout the world to fight inflation—including the U.S. The Federal Reserve raised interest rates by the most since 1994. 

Gold typically benefits from inflation and economic uncertainty, but rising interest rates raise the potential cost of storing the non-yielding metal.

Despite a favourable backdrop of global economic instability and China lockdowns, analysts claim that gold’s recent movement has been strongly correlated with that of the dollar and bond rates. 

Due to COVID-19 regulations, demand for real gold remains muted in China, the world’s largest consumer.

With prices returning to levels they were at before 2022 began, slightly around $1,800, gold’s performance in the second quarter reversed gains achieved earlier in the year as a spiraling crisis between Ukraine and Russia increased demand for the safe haven. 

According to Ilya Spivak, a currency analyst at DailyFX, the bias will turn more pessimistic going forward as rate hikes proceed and lower inflation forecasts. He also added that $1,780-$1,790 is a crucial support level.

Gold is currently one of the top performing assets despite its flat year-to-date return, which may appear uninteresting. It not only generate profits, but it also did it with volatility that was below average. 

During this erratic time, gold has actively assisted investors in limiting losses. especially in light of the fact that throughout the era, both stocks and bonds, which typically make up the majority of investors’ portfolios, showed negative returns.

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The difficult climate will also affect consumer demand for gold during the remainder of the year. A general economic slowdown will put pressure on consumer demand for gold, even if many economies should continue to profit from the post-COVID rebound. This is especially true given that many markets are already seeing noticeably higher local gold prices.

In the case of China, As the government pursues its zero-COVID policy and there may be movement limitations, the country is particularly vulnerable to weakening, which casts doubt on future economic development. 

While less severe than those in China, difficulties with Indian demand exist as well.

The second half of the year will continue to provide considerable hurdles for investors. As a result, they will have to weigh a number of conflicting risks that are further complicated by some degree of ambiguity regarding their severity.

In the second half of 2022, rising nominal interest rates and a potentially stronger currency will be two major challenges for gold.

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