Gold has been in demand since the end of last week, however, its gains were limited by renewed worries over Greece, which seemed to have calmed down following a standby bailout agreement struck by other euro zone states in hopes to improve the outlook for Greece’s debt situation and relieve Europe’s single currency of the pressure it’s had to face for weeks as Europe’s debt crisis unravelled.
This weke it has been reported that Greece is planning to pitch a dollar bond to US investors during Finance Minister George Papaconstantinou’s upcoming US tour. However, Athens’ plans to raise money in Asia appears to have fallen through the cracks due to weak interest shown by Asian investors.
Adding to the concerns over Greece’s ability to handle its own debts were media reports claiming that the debt laden country is trying to amend the financial aid deal that was reached last month during an EU summit to shun financing from the International Monetary Fund. Greece has also claimed that its banks are being hit by substantial cash outflows as local depositors have been rapidly moving their money out of the country.
The US dollar climbed after Monday's economic data turned out positive, showing an 8.2% increase in pending home sales in February and a rise in the ISM non-manufacturing index from 53 in February to 55.4 in March, which marked the fastest expansion of the US services sector in more than two years.
Gold is seen as a riskier investment alternative and usually moves inversely to the safe-haven US dollar.
Gold remained at US$1,127/oz, while silver and platinum inched lower to US$17.96/oz and US$1,703/oz respectively.
Miners were buoyant as metal prices increased. Silver producer Fresnillo (LSE: FRES) and gold miner Randgold Resources (LSE: RRS) added nearly 1%, while fellow FTSE 100 constituent platinum miner Lonmin (LSE: LMI) posted a small gain.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) added 1%.
Yamana Gold (LSE: YAU) rallied 3.6%.
Midcaps did better as Aquarius Platinum (LSE: AQP), gold miner Petropavlovsk (LSE: POG) and silver producer Hochschild Mining (LSE: HOC) advanced 3.3%, 2% and 1% respectively.
Western Australia operating Norseman Gold (AIM: NGL), Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and London listed Australian gold producer Leyshon Resources (AIM: LRL) did well, advancing 10%, 7% and 6% respectively. Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) and Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) added more than 4%.