Gold retreated after setting fresh record highs at over US$1,282/oz, getting more help from a decline in US dollar and rising on inflation fears yesterday.
On Thursday it was reported that US producer prices increased 0.4% in August, which was the biggest gain in five months and double July’s rise of 0.2%. The update increased gold’s appeal as an inflation hedge, while the US dollar, which is seen as an alternative investment, continued declining against the euro.
The EUR/USD rate reached 1.313 after Spain undertook a successful bond auction, easing worries over the country’s fiscal situation.
Again, the yellow metal defied the trend of moving inversely to equities as today’s gains came amid a rally in stock markets, which saw the FTSE 100 and futures for the Dow Jones index in the US add nearly 1%.
Gold stood at US$1,276/oz, while silver and platinum climbed to US$20.88/oz and US$1,622/oz respectively.
Major mining stocks were mixed. Gold miner Randgold Resources (LON:RRS) and platinum producer Lonmin (LON:LMI) added nearly 1%, while silver miner Fresnillo (LON:FRES) declined marginally, as did African Barrick Gold (LON:ABG).
Specialty chemicals firm Johnson Matthey (LON:JMAT) was flat.
Silver producer Hochschild Mining (LON:HOC) led the midcaps with a 1.6% gain. Aquarius Platinum (LON:AQP) and gold producer Petropavlovsk (LON:POG) declined 1%.
Australia operating mining exploration company GGG Resources (LON:GGG) emerged among the top risers in the sector with an 11.5% rally. Gold and high value base metal focused exploration and development company Stratex International (LON:STI) also did well, tacking on 6%.