Gold prices retreated after setting new al time highs at over US$1,430/oz.
US President Barack Obama has agreed to extend the tax breaks introduced by his predecessor George W Bush.
Goldman Sachs (NYSE:GS) said that this would bring a fiscal stimulus of US$185 billion to the US economy.
The move weakened the US dollar and increased’ gold’s appeal as an alternative to the American currency and an inflation hedge.
Later, however, the euro gained against the US dollar after the Irish government unveiled the toughest budget in the country’s history, aiming to reduce the ballooning sovereign debt.
The budget is expected to be approved by the parliament.
Uncertainty over the debt situation in Europe has been among the main driving factors behind gold’s meteoric rise.
Gold last traded at US$1,411/oz. Silver and platinum declined to US$30/oz and US$1,710/oz respectively.
Major mining stocks were on the rise today.
African Barrick Gold (LON:ABG) climbed 5% to take the lead. Fellow gold producer Randgold Resources (LON:RRS) advanced 2%.
Silver miner Fresnillo (LON:FRES) and platinum producer Lonmin (LON:LMI) added 3.1% and 2.5% respectively.
In the FTSE 250, silver producer Hochschild Mining (LON:HOC) surged 6.4%.
Gold miner Petropavlovsk (LON:POG) and Aquarius Platinum (LON:AQP) climbed 2.6% and 2.1% respectively.
Moscow-based gold exploration and mine development company Ovoca Gold (LON:OVG) rose 8%. Kyrgyzstan operating gold miner Chaarat Gold (LON:CHG) and gold producer and exploration company focused on Latin America Orosur Mining (LON:OMI) added 7%.