US markets unsettled as gold sets new records

Gold shone brightly over the Sept. 13-17 trading week, as individuals through to nations sought out a safe investment on the second anniversary of the collapse of Lehman Brothers and the rush pushed the yellow metal’s price to a new high. In fact, gold hit a new high three times in five days: US$1,269 on Tuesday, US$1,275 on Thursday, and then US$1,277 per oz. on Friday.

New global rules requiring banks to increase their core capital cushions to at least 4.5% of assets, up from 2%, helped banking stocks. But the U.S. dollar fell to a new 15-year low against Japan’s yen early in the week, prompting recently re-elected Prime Minister Naoto Kan to announce his nation will sell yen and buy dollars.

Generally, investors remained confused and data conflicted; for example, reports showed slight improvements in retail sales but decreases in consumer confidence. The shadow of looming mid-term elections did not help. By the end of the week the Dow Jones industrial average was up 145.1 points or 0.6% while the S&P 500 index advanced 7.17 points or 0.6%.

Kinross Gold shareholders approved its merger with Red Back Mining and the news prompted 60 million Kinross shares to change hands over the week, lifting its share price US$1.34 to US$18.20. Barrick Gold and Freeport McMoRan Copper & Gold also rose over the week, closing at US$45.99 and US$81.72, respectively.

Ivanhoe Mines converted Rio Tinto‘s maturing US$350-million convertible credit facility, plus accrued interest of US$50.8 million, into roughly 40.1 million Ivanhoe shares. The move increased Rio’s stake in Ivanhoe to 34.9% from 29.6%; the major has now invested US$1.7 billion in Ivanhoe, aimed at advancing Oyu Tolgoi. Ivanhoe’s share price climbed US$2.02 to US$20.33.

Despite having acquired INR Energy’s coal operations, Cliffs Natural Resources lowered its 2010 North American coal sales volume and price outlook because of adverse geologic conditions at its main Pinnacle mine. The company now expects to sell 3.9 million tons of coal at US$115 to US$120 per ton. Cliffs’s share price slid US$6.17 to US$60.96.

And BP‘s share price continued to hover just under US$40 as its workers pumped cement into the Maconde well to permanently seal it. BP capped the well in mid-July but had to wait for a 4-km long relief well to reach the site to kill it permanently. BP’s CEO said he believes claims related to the blow-out will be less than the US$20 billion the company has set aside but a court filing revealed the U.S. Justice Department expects to sue BP for damages.