PR: Gold Looks For Support At $1,121 As Euro Retreats Against US Dollar
Gold retreated after making strong gains on Tuesday when it got a boost from a rally in global stock markets and weakness in the US Dollar.
Gold is seen as an alternative investment and moves inversely to the American currency, which weakened against the euro yesterday amid hopes of an imminent resolution to Greece’s debt situation, which has kept Europe’s single currency under pressure for over a month.
Stock markets were bullish yesterday, further increasing investors’ appetite for riskier assets such as precious metals. In the UK, banking group Barclays (LSE: BARC) released a strong set of full year results, while Kraft Foods (LSE: KFT) and drugmaker Merck (LSE: MRK) also gained strongly after releasing their earnings reports in the US. The Dow Jones Industrial Average and the S&P 50 index gained nearly 2%, while the FTSE 100 rallied 1.5% yesterday.
The sentiment was further lifted by an update from the New York Federal Reserve Bank said that its Empire State manufacturing index rose to 24.9 in February from 15.9 in January, signalling a higher level of manufacturing activity in New York state.
The yellow metal gave way today as the euro declined against the US Dollar after Greece got hit by a wave of strikes in protest against its economic austerity measures aimed at trimming budget deficit to meet the goal of a 4% reduction set for 2010.
Gold stood at US$1,119/oz at noon GMT, while silver and platinum were higher at US$16.17/oz and US$1,541/oz respectively.
Mining stocks were on the rise today. Platinum miner Lonmin (LSE: LMI) and silver and gold producer Fresnillo (LSE: FRES) advanced 1.8%, while fellow blue chip Randgold Resources (LSE: RRS) posted a small gain.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) also added 1.8%.
Silver producer Hochschild Mining (LSE: HOC) was one of the top performers in the FTSE 250 with a 3% improvement. Midcap gold miner Petropavlovsk (LSE: POG) moved up 2% and Aquarius Platinum (LSE: AQP) tacked on less than 1%.
Junior miners didn’t show much movement today. Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) and Philippines focused gold producer Medusa Mining (AIM&ASX: MML) moved with the sector, tacking on nearly 4%, while Argentina focused gold explorer Patagonia Gold (AIM: PGD) moved in the opposite direction, shedding 5%.
