by Doug Ashbury
Northern News Services

NNSL (Apr 24/98) - After several months in the doldrums, the price of gold is enjoying a promising rebound. That's good news for Yellowknife.

Thursday's afternoon London gold fix -- the price set by gold specialists and bank officials twice daily -- was $312.75, down five cents from Wednesday.

Tuesday's fix $307.50.

"Clearly, any increase in the price of gold is a benefit," Royal Oak Mines spokesperson Graham Eacott said.

Eacott said gold prices could jump to around $325 US over the next few months.

"Not that long ago, it was trading in the $280s."

Gold sales by European central banks as well as forward selling by gold producers contributed to last year's depressed gold prices.

On cash costs -- the direct mine-site costs associated with gold production -- Eacott estimated Giant to come in under $290 an ounce for the recently concluded first quarter.

Fourth quarter 1997 cash production costs at Giant mine were $275 per ounce compared to $304 for the year.

Underpinning the mini-rally are several factors, said investment advisor Todd Ferguson with TD Evergreen in Edmonton.

Topping the list is the positive mood of speculative investors.

"The changing sentiment of speculative investors (like hedge fund traders, money managers and specialty commodity traders) has a dramatic impact on the price of gold," he said.

"Gold speculators have shifted to a net long position for the first time in 1998."

This could be the beginning of a long-term recovery, he added.

"Our medium to long-term outlook for gold remains positive. We anticipate $325 (average price) for 1998 and $350 for the longer term."

Other factors driving gold's short-term gains are a weaker Canadian dollar as well as no negative comments from central banks on gold selling. Another positive sign, noted Ferguson, is "we've seen some equity deals come into the market."

Gold producers Iam Gold and Vengold have raised $84 million in financing recently.

"Any move upward has to be viewed as positive," Miramar Mining Corporation operations vice president Brian Labadie said.

Miramar, which owns the Con mine, is not going to be making any strategic changes based on this "mini-bump."

Gold will have to make a much bigger move before Miramar looks at increasing the exploration expenditures, Labadie said.

Echo Bay Mines spokesperson Robbin Lee said indications that European countries wish to hold more gold than was earlier thought is good news.

Earlier this year, Lupin shut down its Lupin mine citing low gold prices.

In third quarter this year, Echo Bay will decide whether or not to reopen Lupin based on gold prices. Lee described $325 an ounce as the threshold price key to Lupin. The decision will be necessary in third quarter because Lupin's resupply is via ice road.