The gold price recorded it heaviest fall for a number of weeks last night dropping more than $15 to trade down at $1,040. In what has been a predominant feature of the gold market, the decline was a direct reflection of a strengthening US Dollar, which experienced its strongest daily performance since August.
This morning the Gold price has stabilised somewhat, with Comex futures trading at $1,040 per ounce after hitting intra-session lows of $1,038.
Over the course of the last month, the weak US Dollar has provided a fundamental base to the rally over recent weeks but there is a definitive speculative element also. Among speculators, ‘Net-long’ trading remains at an all time high in the futures market. As such commentators claim that the initial dollar move and the declining yellow metal price triggered a round of profit taking to further pressure the Gold price.
Up until now, Gold seemed to have had a persistent appeal over recent months as the record breaking rally was sustained over recent weeks to hold above historic levels. The recent, all time high represents a 21% rise over the year to date. The most bullish analysts are expecting a sustained rally.
On the London Stock Exchange, Gold stocks suffered as the yellow metal came under pressure, most stocks fell with the exception of few junior explorers.
Gold miner Petropavlovsk (LSE: POG) dropped 1%, while International gold miner Randgold Resources (LSE: RRS) fell marginally losing half a percent to trade at $43.28.
Canada based Yamana Gold (LSE: YAU) was somewhat weaker losing 2.5% this morning.
In the junior market, Aim listed Ariana Resources PLC (AIM: AAU) surged over 13% in a weak market, after the Turkey-focused gold group announced it is setting up a 50-50 joint venture with a domestic partner to develop the Sindirgi and Tavsan projects in the country. Tajikistan operating explorer Kryso Resources (AIM: KYS) also advanced considerable in a down-trending market, rising nearly 7%.
West African focused gold deposit developer Cluff Gold (AIM & TSX: CLF) rose 1% after it commissioned the Angovia Gold Mine in Côte d'Ivoire to move closer in achieving its target production level of 100,000 ounces in Q4.
European Gold (AIM: EGU) and Avocet Mining (AIM: AVM) were the only other gold stocks on higher ground this morning, with both rising more than 1%.