Gold extended losses today despite a continued selloff in the markets, which has recently boosted safe haven assets such as precious metals. Leading stock market indexes all over the world have experienced sharp falls, unseen since the peak of the economic downturn n the previous year.
Recent falls, propelled by a new wave of fears that the debt crisis that has led to the EU and the International Monetary Fund (IMF) dishing out a massive €110 billion bailout to save the troubled country from bankruptcy and then approving a €750 billion package to provide aid for other euro zone states, should they find themselves in the same situation as Greece, could spread into other euro zone countries, notably Portugal and Spain that have recently been downgraded by leading rating agencies.
Europe’s debt issues, weak euro, Germany’s decision to ban a practice known as naked short selling and the US Senate’s approval of a large scale financial regulatory reform have caused the UK’s FTSE 100 to slip below 5,000 for the first time since November 2009, while the Dow Jones Industrial Average once again moved below 10,000.
Gold has been increasingly seen as a safe haven asset by investors and posted fresh record highs at nearly US$1,250/oz a couple of weeks ago amid sharp falls in European and US markets. Now, however, investors seem to be dumping precious metals along with other assets.
Gold slid to US$1,174/oz today, while silver and platinum retreated to US$17.53/oz and US$1,495/oz respectively.
Major mining stocks were mixed. Randgold Resources (LSE: RRS) lost 1.9%, while platinum miner Lonmin (LSE: LMI) and silver producer Fresnillo (LSE: FRES) lost 1% and 2% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) posted a small loss.
In the FTSE 250, silver miner Hochschild Mining (LSE: HOC) declined 1.8%, gold producer Petropavlovsk (LSE: POG) posted a marginal loss and Aquarius Platinum (LSE: AQP) went against the tide, advancing 3.5%.
Most small caps followed the trend. Uzbekistan focused gold miner Oxus Gold (AIM: OXS) slipped 8.5%, while Russia operating Ovoca Gold (AIM: OVG) lost 7.5% and Africa operating gold miner GMA Resources (AIM: GMA) retreated 6%, as did South American based explorer Mariana Resources (AIM: MARL).