Fool's Gold Report: Gold Tops $1,300 on Ukraine Tensions; Newmont Soars on Earnings

Once again, geopolitical issues took center stage in the gold market Friday, and as tension in Ukraine continued to escalate, gold investors were willing to take advantage of trends favoring safe-haven buying. By the close, gold futures had climbed back above the $1,300 level, sending SPDR Gold Shares (GLD -0.19%) up 0.7% on the day. Palladium pushed even further above the $800 mark, lifting shares of Stillwater Mining (SWC). Earnings also played a role in the gold market today, with Newmont Mining (NEM 2.36%) having reported its results after the bell yesterday.

Why palladium rose
Palladium's climb came largely as a result of fears about what form economic sanctions against Russia might take. With South African sources of palladium unavailable due to labor strikes, Russia is the largest source of palladium for the world market. If sanctions close that market, the only remaining sources would be the relatively small production available from Stillwater Mining and some other small players in the industry. With demand for palladium from automakers remaining relatively firm, the rise in price is a natural response to the Russian uncertainty.

Source: Newmont Mining.

How did Newmont Mining fare?
On the earnings front, Newmont Mining rose almost 4% after the mining company reported its first-quarter results. Earnings topped expectations, but perhaps the best news for the gold miner was that its all-in sustaining costs were well below the midpoint of Newmont's previous guidance, coming in at $1,034 per ounce. That leaves Newmont with a solid margin even with gold prices at depressed levels, and points to the success that the miner has had in its cost-containment efforts. Political issues in Indonesia weighed on Newmont Mining's operations there, and investors remain uncertain about whether the nation's export tax will be lifted at some point. But big gains in gold production at its Tanami mine in Australia helped offset the Indonesian headwinds.

Still, much of the attention on Newmont Mining came from ongoing discussion of the possibility of a merger with Barrick Gold (GOLD -1.02%). Barrick Gold's Chairman, Peter Munk, criticized Newmont yesterday, saying that "they are not shareholder-friendly." At this point, those comments seem merely like posturing, as both parties try to get the best possible deal for their respective shareholders. Still, until Barrick Gold and Newmont Mining reach a final agreement -- if ever -- speculation is likely to continue about consolidation in the gold market.

How metals moved today
June gold futures rose $10.20 per ounce Friday, settling at $1,300.80. May silver futures were only modestly higher, rising less than $0.01 to remain near $19.69. Platinum-group metals were higher on Russian concerns, as palladium finally punched through the $800 level for good.

Source: Kitco. As of 4:30 p.m. EDT.

This weekend, watch the eastern part of Ukraine closely for signs of further aggression. If the area begins to heat up, or if Western nations take action that's any more dramatic than minor economic sanctions, then gold could continue to rise next week.