By Kishori Krishnan Exclusive to Gold Investing News

Gold jumped to its highest in Asia in almost four weeks on Monday as fears of a global flu pandemic prompted investors to seek safer assets. By Tuesday however, gold slipped below $900 for the first time since Thursday. It jumped to its highest since early April at $918.25 on Monday.

Fears of a global swine flu pandemic grew with new infections in the United States and Canada on Sunday, and millions of Mexicans hid indoors to avoid a virus that has killed 103 people. Oil dropped more than 2 per cent towards $50 a barrel.

Precious metals tracked gold higher, other than platinum which is seen as an industrial metal and was hit by worries over the world economy should the flu outbreak spread and become a pandemic. Gold hit an intraday high of $918.25 an ounce, its highest since April 2, on follow-through buying after China said last week its gold reserves had risen. China revealed on Friday it had secretly raised its gold reserves by three-quarters since 2003, confirming years of speculation it had been buying. The metal later slipped to $914.30, still $3.20 higher than New York’s notional close.

“I am not too sure how the swine flu will play out. The problem is the potential for this to explode to pandemic proportions leaving a lot of people very, very wary,” said Darren Heathcote of Investec Australia. “It may well benefit gold, as gold would be seen as a safe haven,” he said. Gold, which has registered four straight sessions of gains, has risen 5 per cent over the past week and is 8 per cent below an 11-month high above $1,000 hit in February.

“It looks like we have moved out of the 2-month downtrend and perhaps gold could head very much higher. The increase in Chinese reserves did play a part and I guess the technical traders will perhaps start coming in,” said a dealer in Singapore.

Dealers expected gold to face resistance around $932 — an intraday high seen in early April. “Ultimately, we could well be targetting that mid $960s again, which is that peak in the middle of March,” said Heathcote of Investec Australia.

Traders maintained that investors also shifted their attention to a Federal Reserve meeting at a time when the U.S. economy has shown some signs of improvement.  “The Fed is likely to keep rates as they are but the markets will be interested in listening to what they have to say about the economy and what they are going to do moving forward,” said Adriah Koh, an analyst at Phillip Futures in Singapore. “I am still a little hopeful for gold to head higher, but I guess we need more confirmation for gold to head higher,” he said.

Policy-makers are likely to focus on whether signs of life seen in the economy in February are signalling that the worst is over for a severe recession that started in December 2007.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said holdings remained unchanged from the previous day at 1,104.45 tonnes on April 27.  Gold stocks are still far too cheap relative to gold today.

Among other precious metals for immediate delivery, silver fell 1 per cent to $12.78 an ounce, platinum lost 0.3 per cent to $1,140.75 an ounce, and palladium was little changed at $225.50 an ounce in Singapore on April 28.

Fantastic gold stocks

AP has reported that a Montreal-based mining company has announced plans to explore the mountains of  northeastern Haiti for gold and copper. Majescor Resources Inc. (CVE:MJX) will explore the site in a partnership with Simact Mining Holding Inc., a Long Island, New York-based consortium of Haitian American investors.

Majescor President Marc-Andre Bernier said Monday the company is encouraged by explorations that Eurasian Minerals Inc. is conducting at a nearby site. Gold and copper were found in the Caribbean nation decades ago, but Haiti’s instability and lack of infrastructure have discouraged investment. Another Barrick Gold Corp. (TSE:AVX ) site about 130 miles (210 kilometers) southeast in the Dominican Republic is also estimated to contain 20.4 million ounces of gold.

Junior mineral explorer TNR Gold Corp. (TSXV:TNR) said it planned to spin out its lithium and rare metals projects into a separate company to be known as International Lithium Corp. TNR said Monday that its existing shareholders would own up to 75 per cent of International Lithium, and TNR plans to sell additional equity in conjunction with the spinoff. It offered no specifics on expected valuations, and said details will be released in the coming months.

“With a subsidiary that is marketed as a focused and dominant player in the growing lithium and rare metals explorer realm, we believe it will provide the necessary visibility and efficiency that potential joint venture partners are looking for,” stated TNR chief executive officer Gary Schellenberg. TNR currently has 20 properties in its portfolio and a TSX Venture Exchange capitalization of about $9 million.

Avocet Mining‘s shares rise as much as 17 per cent after the gold miner said gold production was up in the fourth quarter, boosted by operational improvements at its North Lanut mine in Indonesia. Analyst Jonathan Guy of Investec Securities says: ‘The North Lanut mine appears to have turned the corner after a difficult year.’

The brokerage upgrades the company’s stock to ‘buy’ and lifts its price target to 91 pence to include valuation of the company’s planned acqusition of Norway’s Wega and an assumed higher gold price.

Gold festival

Akshaya Trithiya, a gold buying festival in India celebrated on Monday, failed to give a shine to the gold stocks on the bourses even as the yellow metal prices remained low.

India’s auspicious gold-buying day is behind us upon us and Reuters reported that: “The marriage season in India is in full swing. But jewelry purchases, an integral part of the big Indian wedding, seem to be dipping. The Rs 80,000-crore gold, gems and jewelry market in India is estimated to have suffered a decline of about 25 per cent in the last few months.

Gold prices have risen just about 3.7 per cent in the past three weeks. One should not forget that one of  the most important criteria for gold/silver being used as money historically is because of the divisibility of gold/silver metals. Been able to divide gold/silver into smaller pieces easily and still retain exactly the same value when summing back up is extremely important to function as money.

Be that as it may, some experts still believe the supply/demand dynamics don’t apply to gold. This is because it continues to be a store of wealth. Gold is not a commodity that gets used, rather something that gets saved. And because of this, all the 162,000MT or so of gold that has been mined through history, according to the World Gold Council, is still out there and available to us in its refined form. Because of this, even if demand outstrips the year’s new supply by two to one in any given year, we’re talking a very small percentage of the gold out there that is available.