Randgold Resources Ltd. (NASDAQ:GOLD), Gold Fields Limited (NYSE:GFI), Golden Star Resources Ltd. (AMEX:GSS), Jaguar Mining Inc. (NYSE:JAG) and other gold stocks fell early during today’s session amid a rally in the U.S. dollar.
The U.S. dollar strengthened against other major global currencies, including the euro, as the European Union continues to struggle with the fiscal deficits of its member states. As a result, dollar-denominated gold prices fell, erasing some of the earlier gains during the week.
However, gold prices are expected to remain well-supported given the global economic uncertainty in general and the potential for additional central bank purchases. Many banks around the world have been accumulating gold for their reserves as an alternative to the dollar.
China’s Golden Objectives
China has already indicated that it intends to diversify its massive foreign reserves into gold, but many experts believe that the country is waiting for cheaper prices. Some analysts, like Mark Robinson, believe that China may be waiting for an $800 per ounce pricing point.
These same sentiments have been echoed by other analysts who also forecast a bearish long-term picture for the yellow commodity. Citigroup bullion analyst Alan Heap, for examples, expects gold prices to sink to $820 per ounce by 2014.
In the end, it is this demand from China that may spur a long-term bottom to the market. In the meantime, short-term trading will largely be dictated by the price of the dollar and the level of global uncertainty and inflation in the system.
