Gold soars after debt deal; precious metal miners climb

SAN FRANCISCO  (Oct 17)   Gold futures surged by more than $34 an ounce on Thursday after Congress approved a short-term deal to reopen the government and increase the nation's debt limit until February 7.

Back to business as usual means that the scaling back of Fed bond purchases will be further postponed, as the U.S. continues on its path of unsustainable spending, with gold providing a safe haven for this behaviour.

Congress late Wednesday approved the Senate deal to finance the government until January 15 and increase the borrowing limit until February 7, averting a technical default and resuming government operations after a 16-day shutdown.

Gold for December delivery lately jumped $35 to $1,317 an ounce on the Comex division of the New York Mercantile Exchange. Comex prices were poised to close at their highest level in more than a week, with their biggest weekly percentage gain since at least Oct. 2, according to FactSet data.

The materials sector was trading higher in Toronto on Thursday by 2.4%, helped largely by gains in precious metals companies. Barrick Gold (TSE:ABX) jumped 2.9% to C$18.75, while Goldcorp (TSE:G) climbed 3.9% to C$25.37 and Kinross Gold (TSE:K) added 3.9% to C$5.05.

Some of the leading advancers in the sector were Fortuna Silver Mines (TSE:FVI), which jumped 9.4% to C$3.62 after announcing a 22% increase to its San Jose silver reserves, and Banro (TSE:BAA), which rose almost 9% to 73 Canadian cents.

Newmont Mining (NYSE:NEM) in New York climbed 3.4% to US$26.76.

Also influencing gold, economic data in the U.S. Thursday showed that new applications for U.S. unemployment benefits fell by a less-than-expected 15,000 to 358,000 for the week that ended October 12, remaining elevated due to processing delays in California government shutdown layoffs.

The Philadelphia Fed’s manufacturing index also dropped to a reading of 19.8 in October from 22.3 in September, better than economist forecasts of 15.0.