Gold was slightly higher today due to weakness in the US Dollar on a quiet day of trading due to the Martin Luther King Day public holiday in the US. The American currency retreated after rising against the euro last week on concerns over the debt situation in Greece.
The yellow metal steadied around US$1,130/oz and later reached US$1,133/oz on low volumes, while silver and platinum improved to US$18.62/oz and US$1,616/oz respectively.
Gold prices have also been supported by a high level of demand as Friday’s update from the world’s largest gold backed fund SPDR Gold Trust showed a further decline of 0.9 tonnes to 1,113 tonnes. Holdings in the trust fell 0.04% to 1,126 metric tonnes a week ago after declining to 1,128.75 metric tonnes at the beginning of the year, marking a decline of 4.87 metric tonnes from the end of 2009.
Last week, consultancy GMFS projected gold to come back to record levels in the first half of the current year after climbing above US$1,200/oz at the end of 2009. GMFS said the average price during this period could be as high as US$1,175/oz compared to the current value of US$1,136/oz and last year’s average price of US$972/oz. Gold could be boosted by further weakening of the US Dollar, which contributed heavily to its last year’s surge, as well as its appeal as hedge against the inflation, which is likely to occur this year due to the Fed’s unwillingness to tighten the currently loose economic policy and keep the interest rates at the current levels.
Mining stocks advanced as metal prices rose. Silver miner Fresnillo (LSE: FRES) led the blue chip mining stocks with a 1.3% climb. Gold miner Randgold Resources (LSE: RRS) added 1%, while platinum producer Lonmin (LSE: LMI) posted a small gain.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) rose marginally.
Silver producer Hochschild Mining (LSE: HOC) led the midcaps with a 1.5% advance, while fellow FTSE 250 constituents gold miner Petropavlovsk (LSE: POG) and Aquarius Platinum (LSE: AQP) added about 1%.
Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) led the juniors with a 6% gain after reporting positive results from its exploration programme at the Shehagne gold project in Ethiopia. Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and Africa operating gold miner GMA Resources (AIM: GMA) followed, advancing 4% and Philippines focused gold producer Medusa Mining (AIM&ASX: MML) rose 3%.
Brazil focused gold miner Horizonte Minerals (AIM: HZM) headed in the opposite direction, shedding 4.5%. Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) and Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) also were in decline, moving down 4%.