Fool's Gold Report: Metals Soar as Gold Climbs to Highest Levels in 2014

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Gold prices jumped to their best levels in 2014 today, as a poor reading from the University of Michigan's Consumer Sentiment Index led to some uncertainty about whether the Federal Reserve will taper its bond-buying activity as quickly as some fear. Spot gold prices jumped $11 per ounce, to $1,254, sending the SPDR Gold Trust to gains of nearly 1%. Silver rose $0.23 per ounce, to $20.33, with iShares Silver rising 0.8% on the session. Platinum led the way higher today with a $22 rise, to $1,451, while palladium picked up $6 per ounce, to $747.

One factor that always plays a role in the platinum market is the state of the labor market in South Africa, which has some of the world's biggest platinum producers. With reports of a strike vote against Impala Platinum and Lonmin in South Africa, a temporary drop in platinum production could support prices in the near term. If workers at Anglo American follow suit, it could hurt the three top producers, and bring more than half of the world's platinum output to a standstill.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

Also helping to bolster the market were positive calls from Morgan Stanley in the metals markets. The analyst sees palladium and copper performing best, but it made a full-year gold forecast of $1,313 per ounce, with platinum coming in at $1,639, and silver at $21. Supply conditions in the platinum-group metals make the area more attractive than gold, given the negative impact that Fed tapering will likely have on gold demand.

Mining stocks performed well, with the Market Vectors Gold Miners ETF climbing 3%. Smaller miners posted even sharper gains, with AuRico Gold gaining more than 7% on the general strength in the market. The company's preliminary operational results announced earlier this week included operational results that just hit the lower end of its production guidance, although cash costs at $676 for the full 2013 year came in above guidance of $565 to $645 per ounce, due largely to much higher-than-expected costs at its Young-Davidson mine. Still, AuRico has room to run higher if gold prices can maintain their higher levels from here.

Even somewhat disappointing news got positive results. Coeur Mining said that silver production actually dropped 6% for the full 2013 year, with production levels at 17 million ounces. Yet, gold production hit a record of just over 262,000 ounces, rising 16%. Coeur gave production guidance that points to modest growth in silver production at the expense of roughly 10% to 15% reduction in gold production levels. Favorable cost projections could help the company be more profitable in the future, even as Coeur tries to emphasize higher-margin operations over simply maximizing output volume.

Investors can take heart from the recent gains in gold, which have defied expectations that 2014 would continue to be a weak year for precious metals. Still, gold could face plenty of headwinds throughout the remainder of the year, making 2014 a challenging year for those trying to pick a direction for the gold market.