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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.
Gold posts new record high at $1,317 as US dollar declines against euro
Gold posted another record today, reaching US$1,317/oz as a decline in the US dollar, which is seen as an alternative investment to the yellow metal, outweighed pressure from the rising stock markets.
The American currency slid to six month lows against the euro, still feeling pressure from the Federal Reserve’s anticipated return to quantitative easing (QE).
Following last week’s policy meeting, the Fed acknowledged the slowing recovery, saying that introduction of more QE was on the table.
The statement reinforced the concerns over the pace of the recovery and fears of a higher inflation, boosting gold, which is seen as a safe haven asset and an inflation hedge.
Gold got more support yesterday, when rating agency Moody’s cut Spain’s sovereign rating from Aaa to Aa1, reviving fears over the debt situation in the euro zone, which have calmed over the past two months, easing pressure on the euro and European equity markets.
Gold stood at US$1,314/oz in late afternoon. Silver and platinum rallied to US$21.89/oz and US$1,674/oz respectively.
Major mining stocks were on the rise today. Gold producer Randgold Resources (LON:RRS) added 1%, while peer African Barrick Gold (LON:ABG) tacked on 2.2%.
Silver miner Fresnillo (LON:FRES) and platinum miner Lonmin (LON:LMI) advanced 2% and 1.5% respectively.
Midcaps didn’t do that well. Aquarius Platinum (LON:AQP) posted a small loss, while silver producer Hochschild Mining (LON:HOC) dropped 2.1% and gold miner Petropavlovsk (LON:POG) was flat.
Moscow-based gold exploration and mine development company Ovoca Gold (LON:OVC) was among the top performing small caps with an 11.5% rally. Cluff Gold (LON:CLF) and Electrum Resources (LON:ECR) followed with gains of 8% and 6.5% respectively.
Saudi Arabia and Turkey operating gold and copper explorer KEFI Minerals (LON:KEFI) and gold and silver explorer Patagonia Gold (LON:PGD) each added 5%.
