Resilient Gold Futures Enjoy Gains as Dollar Weakness Resumes

Resilient gold futures have had a good Tuesday session so far, with the December Comex contract gaining almost $14 this morning. The gold price has recovered substantially after recent sessions have tested support around the $1,000 level. At lunchtime in London, December futures were changing hands around just below $1,019.

The move comes as Dollar bulls turn quiet. Despite an improved end to last week the dollar appears to have returned to what many analysts believe is the dominant trend. The Dollar index weakened further overnight falling almost 1%, reversing recent gains. The dollar’s decline this morning was lead by selling against the Euro, with Euro:Dollar reaching a 52 week high.

Forex commentators have identified the recent bearish trend in which temporary strength in the dollar has signalled broad based selling by traders. Analysts and traders alike will be looking to this week’s G20 summit for further guidance on the fundamental outlook for the US Dollar.

Economists believe that the G20’s ambition to rebalance the global economy will require a weaker US Dollar in the longer term.

Elsewhere a more direct influence may instil hesitancy in the gold market, potentially capping an immediate resurgence to last week’s highs.

Investors will be waiting to see the impact the IMF’s gold sales have on the yellow metal’s price. Despite a pledge seeking to avoid disruption in commodity markets, some analysts believe that the $13bn sale could pressure the market.

If the gold is purchased and transferred directly to a central bank in line with the prevailing market value, the IMF will bypass the market and the deal will effectively be irrelevant. Although reports suggest the more likely outcome will see China buying the gold at a discount to diversify their reserves, some market commentators suggest that this would have an adverse effect on the gold market generally.

In London this morning, UK listed gold equities have responded well following several ‘down days’. Major International producer Randgold Resources (LSE: RRS) reversed yesterday’s losses, advancing £1.30 to climb  3% this morning, Randgold was last trading at £45.58.

Mid-tier precious metal operator Peter Hambro Mining (LSE: POG) has also recovered well, rising almost 5% to trade at £9.28, while dual-listed Canada-based Yamana Gold (LSE: YAU NYSE: AUY) has been less volatile in recent sessions. Shares were slightly stronger this morning, rising marginally.

In London’s AIM market junior gold equities were also returning to gains on Tuesday.

Leyshon Resources (AIM: LRL, ASX:LRL) surged over 60% in opening ttrade this morning, reaching 9 pence following the news that it had agreed the disposal of its Chinese Zheng Guang project. At lunchtime today Leyshon was up 25% on the day, trading at 6¾ pence per share.

Algeria focused GMA Resources (AIM: GMA) has been marked up significantly this morning, with the stock rising 25% on fairly average volume without any official news flow.

West African gold producer Cluff Gold (AIM & TSX: CLF) improved after yesterday’s decline. rising 6% to trade at 75p around lunchtime today.  Shares in Australia focused Norseman Gold (AIM & ASX: NGL) were also positive today, recouping some of yesterday’s losses, gaining almost 2%.

Middle-Eastern based Centamin Egypt (AIM: CEY) was up 3% so far today with stock last changing hands at 99p per share. Avocet Mining (AIM: AVM) had risen around 2½ % by lunchtime.

Shares in Irish-based, Iranian operating miner Persian Gold (AIM: PNG) were unmoved by the announcement of cost cutting measures as it is considering projects outside of the clouded Iranian picture.

Elsewhere a few gold equities had a less productive trading session this morning.

Ariana Resources (AIM: AAU) fell against its recent  trend, dropping 12% this morning in the absence of relevant  comment or news flow. Fiji-operating Vatukoula Gold Mines (AIM: VGM) added to yesterday’s losses, dropping 2%, while Central China Gold (AIM: GGG) fell almost 1%.