Despite today’s positive trend in stock markets gold held steady at nearly US$1,230/oz as investors remained jittery after the latest US jobs data and ahead of Friday’s US GDP figures. They continued to pour money into safe haven assets such as gold and the US dollar.
The FTSE 100 rallied 1%, enjoying strong support from gains in the mining sector, while futures for the Dow Jones Industrial Average in the US currently point to a higher start on Wall Street today.
A survey conducted by Bloomberg showed that investors and analysts were expecting gold to advance this week due to the growing concern over the speed of the economic recovery and fears of a double dip recession, spurred by the latest updates on US employment and manufacturing, as well as downbeat comments from the Federal Reserve and the Bank of England.
Earlier this month, Goldman Sachs projected bullion to reach US$1,300/oz within six months on speculative buying and a projected return to quantitative easing by the Fed.
The safe haven gold normally moves inversely to equities with investors hedging risks associated with volatility in shares and commodities. The uncertain outlook for the economic recovery leads to increased risk aversion and is the main reason behind the yellow metal’s current strength.
Gold held steady at US$1,227/oz, while silver and platinum inched lower to US$18.01/oz and US$1,507/oz respectively.
Major mining stocks were in demand today with all precious metals focused companies in the FTSE 350 posting gains. Silver miner Fresnillo (LON:FRES) and platinum miner Lonmin (LON:LMI) climbed 3.3% and 2.1% respectively, while fellow FTSE 100 constituent, gold miner Randgold Resources (LON:RRS), added 1%, as did peer African Barrick Gold (LON:ABG).
Specialty chemicals firm Johnson Matthey (LON:JMAT) rose marginally.
Aquarius Platinum (LON:AQP) led the sector in the FTSE 250 with a 3.7% advance. Gold miner Petropavlovsk (LON:POG) and midcap silver producer Hochschild Mining (LON:HOC) tacked on 2% and 1% respectively.
Horizonte Minerals (LON:HZM) led the juniors with a 12.5% rally after signing a US$4.5 million earn in agreement on its wholly owned Falcao gold project in Brazil with AngloGold Ashanti. The only publicly listed gold mining company with primary operations in the Republic of Uzbekistan Oxus Gold (LON:OXS) followed, advancing 8% after announcing the first results from its exploration programme at the territory of its 50% owned Amantaytau Goldfields joint venture. Gold and base metals focused explorer and developer Stratex International (LON:STX) and Philippines operating gold producer Medusa Mining (LON:MML) climbed 6.5% and 5% respectively.
Turkey and Saudi Arabia focused gold and copper explorer KEFI Minerals (LON:KEFI) moved in the opposite direction, shedding 5%.