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Gold is a highly sought-after precious metal which, for many centuries, has been used as money, a store of value and in jewelry. The metal occurs as nuggets or grains in rocks, underground "veins" and in alluvial deposits. Modern industrial uses include dentistry and electronics, where gold has traditionally found use because of its good resistance to oxidative corrosion.
Randgold Resources, Lonmin and Fresnillo slip as gold, silver and platinum decline
Gold fell sharply today as the US dollar gained against other major currencies on fears of further tightening of monetary policy in China after the country’s consumer price index increased to an annualised rate of 2.7% in February to signal higher inflation, which, however, was still within the government’s 3% target for 2010. Back in January, China moved to implement a series of measures to curb credit growth after it reached record levels in the first weeks of the year, pushing lending down to 700 billion yuan in February compared to 1.39 trillion yuan in the previous month.
The American currency is seen as a safe haven asset, while gold is considered to be a riskier alternative and usually moves inversely to the US dollar.
The euro performed well last week after debt laden Greece introduced a new round of economic austerity measures and conducted a successful €5 billion bond issue to meet its near term commitments to ease concerns over its ability to avoid a default. This week, however, Europe’s single currency fell under pressure after Fitch threatened to cut Portugal’s rating from the current AA if the ongoing fiscal consolidation continues at a slow pace and proves insufficient. The euro edged higher later in the week after Portugal raised US$1.35 billion via a bond issue to prop up precious metals, though it fell back today ahead of the Swiss National Bank’s interest rate decision, which will be released at 13:30 GMT.
Gold stabilised at about US$1,105/oz, climbing on technical buying, which intensified once the yellow metal moved closer to the psychological level of US$1,100/oz.
Silver and platinum followed, dropped to US$16.92/oz and US$1,581/oz respectively.
Most major mining stocks were in decline today. Silver producer Frensillo (LSE: FRES) led the retreat with a 2.6% loss. Randgold Resources (LSE: RRS) and platinum producer Lonmin (LSE: LMI) declined 2.2% and 1.7% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) was flat.
Midcap gold miner Petropavlovsk (LSE: POG) posted a small gain to defy the trend, however, fellow FTSE 250 constituents Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) slipped 2.8% and 2.6% respectively.
Africa operating gold and platinum miner Goldplat (AIM: GDP), Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and Brazil focused gold miner Horizonte Minerals (AIM: HZM) climbed 10%, 7% and 6% respectively.
Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (AIM: CGH) and Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) headed in the opposite direction, slipping 6% and 3.5% respectively.
