Oil, inflation fears temper trading

TORONTO STOCK EXCHANGE

Two events tempered trading activity in resource stocks on U.S. markets over the Aug. 2-8 report period — surging oil prices and concerns that the Fed will raise interest rates yet again to curb inflationary pressures. These events took the wind out of a rally in gold prices driven by strikes and labour unrest at several large South African gold mines. The general mood of uncertainty was reflected in the S&P 500 Index, which lost 12.22 points at 1,223.13 over the trading period.

Rio Tinto jumped US$10.07 at US$143.97 as it posted record earnings of US$2.1 billion in the first half of 2005, more than double those of a year earlier, and record cash flow of US$3.4 billion, up 69% from the first six months of 2004.

Newmont Mining was the most active senior gold company, up US$1.27 at US$38.96, no doubt because it has no South African mines. South Africa’s Gold Fields, on the other hand, only managed to eke out a US21-gain to US$10.93. After taking a recent hit because of lacklustre second-quarter operating results, Placer Dome rebounded with a US70-gain to settle at US$14.70.

Phelps Dodge jumped US$2.05 to reach a new high of US$110.05. The company posted record operating results for the first half of this year. Net income soared to US$1.06 billion from US$412.3 million in the first six months of 2004.

U.S. Gold was the top percentage gainer, almost doubling in price after Rob McEwen, the flamboyant chairman of Goldcorp, took down a stake in the junior and announced he would soon become chairman. U.S. Gold gained US79 at US$1.64, reflecting strong interest in the company’s land position in the highly prospective Cortez gold trend of Nevada.