Rising US dollar pressures gold


Gold recovered after dropping early in today’s session, but failed to reclaim the US$1,500/oz level under pressure from the resurgent US dollar. The American currency soared to seven week highs against the euro after chairman of the International Monetary Fund Dominique Strauss-Kahn was arrested in the US on attempted sexual assault charges.

Strauss-Kahn played a prominent role in negotiating the bailout deals received by Greece, Ireland and Portugal. His arrest delivered a blow to Europe’s efforts to tackle its debt problems, primarily rescheduling Greece’s debt.

The news triggered a sell-off in equity markets across the globe and boosted safe haven demand. However, traders were opting for the greenback over gold for wealth protection; still, they were reluctant to sell the yellow metal amid uncertainty over Europe’s sovereign debt problems.

Gold held steady at US$1,498/oz. Silver and platinum slipped to US$34.82/oz and US$1,760/oz respectively.

Mining stocks were in decline. Fresnillo (LON:FRES) and Lonmin (LON:LMI) dropped 1 percent.

In the FTSE 250, Hochschild Mining (LON:HOC) and Petropavlovsk (LON:POG) shed 3.7 percent and 2.6 percent respectively. African Barrick Gold (LON:ABG) was down 1.6 percent and Aquarius Platinum (LON:AQP) eased 1.2 percent.

Diversified mining investment company ECR Minerals (LON:ECR) led the sector, soaring 67 percent.

Base metals focused miners weren’t very active today. Eurasian Natural Resources (LON:ENRC) fell 2 percent.

Mineral exploration company focused on gold and uranium Red Rock Resources (LON:RRR) was among the top performers in the sector, rallying 12 percent. Nickel and copper explorer Regency Mines (LON:RGM) added 7 percent.

Quick facts: GOLD

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Market: AIM
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