Friday’s better-than-expected jobs report in the U.S. has once again lifted market sentiment.
However, it has also raised the possibility of a rate hike from the Federal Reserve.
In its most recent FOMC minutes, the Fed had hinted at a rate hike in 2016. The question was whether the rate hike would come at the September meeting or the December meeting. The better-than-expected jobs data has strengthened the case for a September rate hike. Not surprisingly, gold prices have edged lower.
However, a September rate hike does not really weaken the bullish case for gold. Even if the Fed hikes rate in September, the pace of future rate hikes will be slow. Remember that apart from the labour market data, the Fed also watches inflation. The Fed has an inflation target of 2%. Current inflation levels in the U.S. are well below this level.
Another reason why the Fed will take a gradual approach is the U.S. dollar. A rate hike will strengthen the U.S. dollar, especially given the fact that all other major central banks are currently easing. A stronger dollar though has negative implications for the U.S. economy.
Goldstar Minerals Inc. (TSX-Venture:GDM) is a Montreal, Canada-based natural resource development and exploration company. The company is engaged in the exploration of mineral properties in the Province of Quebec and the Province of New Brunswick.
GDM shares are soaring in trading today after the company announced that detailed ground geophysics and geochemical surveys were completed on its Lake George Property, located in New Brunswick. GDM noted that a total of 404 samples, consisting of 394 soil and 10 outcrop samples, were collected along and near IP lines at 50 meter intervals by its own geological team and all samples were sent for assaying to Actlabs at their Fredericton facilities.
GDM said that the preliminary IP interpretation has outlined large and strong responses of kilometric size that coincide with most of the geophysical anomalies identified by the airborne survey. Additionally, the company has received initial soil sample results and a strong gold and tellurium geochemical anomaly was outlined, near a magnetic anomaly in the southwest portion of the property.
As mentioned, GDM shares have skyrocketed in trading today. At last check, the stock was trading 57% higher at $0.0550 on volume of 1.6 Million, which is substantially above the daily average volume of 44,579. Shares have been in an uptrend since early April and with today’s strong move higher look to be closing in on a key resistance level around $0.07.
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