Although the Federal Reserve raised interest rates 50 base points as anticipated, markets didn’t really like the near term outlook of Powell, as they hoped for a more dovish stance on inflation and economic developments. This resulted in more volatility, but fortunately the gold price remained at US$1800/oz levels.
CEO Elaine Ellingham (middle) at Wenot drill rig
With the world economy slowly moving towards a recession it seems, with inflation, rate hikes, shortages and the Russia aggression far from being over, Omai Gold Mines (TSXV:OMG) decided not to back down and instead advanced their Omai gold project in Guyana, and reported a significant resource update on October 20, 2022.
With gold slightly recovering from its US$1700/oz lows, as it trades at US$1782/oz at the time of writing, it seems traders liked to see the Federal Reserve backing down from a very aggressive rate hike policy, as the world economy continues to weaken, with the Russia-Ukraine conflict still being far from over, shortages are everywhere, and inflation continues to be at extremely high levels.
Although the US Dollar index recently broke through levels not seen since 2003, indicating great strength, caused by already announced and anticipated Fed rate hikes to counter the multi-decade high inflation levels, gold is still trading around US$1850/oz. As the Russia-Ukraine conflict is still far from over, and markets are frothy over a potential looming recession, gold as the ultimate fear trade appears to be holding its ground firmly.
Although still under the radar, Omai Gold Mines (TSXV:OMG) is looking to change this soon, as they are in the midst of an ongoing trenching and drill program at their Omai Gold project in Guyana, and are raising money at the moment.
Recently I used the proverb “in order to find a new mine, look in the shadow of the headframe of an old or existing mine”. However, there is not even the need to even find a new mine in the case of Omai Gold Mines (TSXV:OMG), as they are working on revitalizing the existing Omai gold mine in Guyana, which closed in 2005 due to low gold prices.