Gold prices were moving within a narrow range on Monday, sliding just below US$1,245/oz after failing to capture the US$1,250/oz level at the end of last week.
The yellow metal is still resisting the pressure from rising stock markets and concerns that there isn’t enough support for the asset to rise further.
After advancing 1.1% by late afternoon, the UK’s FTSE 100 is poised to extend its winning streak to four sessions, while the Dow Jones Industrial Average is currently projected to gain 0.8% in early trade today.
Equities were lifted by a 13.9% jump in China’s industrial production in August and news about the Basel Committee's decision on new financial regulations.
The committee passed the Basel III banking reforms, introducing a capital ratio requirement of 4.5%, while also placing certain restrictions on banks with a ratio of less than 7% to curb the risk of another financial meltdown. Banks have been given until 2019 to comply with the regulations, while a shorter time frame was expected.
Gold is seen as a safe haven asset and usually moves inversely to equities. The continuing upward movement in stock markets has prompted investors to turn to riskier assets, yet gold is still holding on due to a decline in the US dollar, which is seen as an alternative safety option.
In other news, Bloomberg reported that India’s largest jewellery retailer Titan Industries is expecting to see the slowest increase in sales in five years for the 12 months to June due to record high gold prices.
Gold slid to US$1,244/oz, while silver and platinum moved in the opposite direction, rising to US$19.92/oz and US$1,547/oz respectively.
Gold producer Randgold Resources (LON:RRS) was unmoved, while most other major mining stocks rose.
African Barrick Gold (LON:ABG) posted a small gain, while platinum miner Lonmin (LON:LMI) and silver miner Fresnillo (LON:FRES) advanced 2.6% and 1.3% respectively.
Specialty chemicals firm Johnson Matthey (LON:JMAT) stood just above the opening level.
Aquarius Platinum (LON:AQP) surged 3.3%. Other midcaps also did well with gold miner Petropavlovsk (LON:POG) added 1.7% and silver producer Hochschild Mining (LON:HOC) rising marginally.
Turkey and Saudi Arabia focused exploration company KEFI Minerals (LON:KEFI) was among the top risers in the sector with a 16% rally. Zambia focused coloured gemstone company Gemfields (LON:GEM) and gold and high-value base metals focused explorer and developer Stratex International (LON:STX) climbed 10%. West Africa operating diamond production and development company Stellar Diamonds (LON:STEL) followed with a 9% gain.
Australia operating mining exploration company GGG Resources (LON:GGG) advanced 8%.
Investment holding company with a focus on potentially large or high value gold and copper-gold prospects in South America, Mariana Resources (LON:MARL), and junior gold exploration company Solomon Gold (LON:SOLG) joined the party, surging 7% and 6% respectively.