Gold, Silver Shares Pare Losses, XAU Rebounds

Gold and silver equities recouped the large majority of this morning’s losses as the broader markets rallied and precious metals stabilized near unchanged.

The Philadelphia Gold & Silver Index (XAU) initially fell as much as 1.5% to 153.26, but bounced back to close down by just 0.1% at 155.44.  However, the XAU still posted its fifth decline in the past six trading days and remains lower by 14.0% on a year-to-date basis.

COMEX gold futures settled higher by $3.50, or 0.2%, at $1,578.40 per ounce, while silver futures ended dipped $0.10, or 0.4%, to $26.94 per ounce.  The S&P 500 Index advanced by 11.86 points, or 0.9%, to 1,331.85.

Several XAU components were in the news today as various Wall Street analysts published reports on these companies.

Scotia Capital reiterated its Sector Perform rating and $46.50 price target on Agnico-Eagle Mines (AEM), following the company’s exploration update release.  In a note to clients, Scotia analyst Tanya Jakusconek wrote that “Exploration results are promising; in line with AEM’s target of reaching 20 Moz in reserves by year-end 2012 from 18.8 Moz in 2011.”

Shares of AEM finished down by $0.30, or 0.7%, at $40.18.

TD Securities discussed Pan American Silver’s (PAAS) recent sale of the Quiruvilca Mine in Peru yesterday for $2 million in cash and a 2% net smelter return on the property.

“The sale of Quiruvilca removes a high-cost non-core asset for the company that was effectively put in care and maintenance by the company in 2009,” TD analyst Daniel Earle stated. “We view the purchase price as being in line with our NAV5% for the asset (we carried a US$2mm valuation for the property or US$0.01/share) and the potential NSR royalty as providing a low-risk method of participating in a turn-around of the asset in the future.”

Shares of PAAS closed up by $0.14, or 0.8%, at $16.95.

Lastly, Stifel Nicolaus reiterated its Hold rating on Eldorado Gold (EGO) – the firm does not issue price targets on Hold-rated stocks – after the gold miner provided an updated on its 2012 exploration activities.

Analyst Josh Wolfson commented that “A continuation of exploration efforts at pre-existing targets has yielded positive results at Efemcukuru (Turkey, 10% of NAV) and Jinfeng (China, 8% of NAV), while early stage drilling at Piavitsa (Greece) has confirmed the presence of high grade polymetallic mineralization. Our Eldorado forecasts continue to incorporate reserve additions at Efemcukuru and Jinfeng, while higher grades intercepted at these targets today as well as exploration success at Piavitsa have the potential to improve our valuation.”

EGO settled lower by $0.04, or 0.3%, at $12.19 per share.