Gold set new record highs today, rising above US$1,400/oz, as investors sought protection amid a new wave of debt worries in Europe and the anticipated inflation of the US dollar.
Last week, the Federal Reserve announced that it would buy US$600 billion worth of treasuries in an attempt to spur the slowing economic recovery by driving up consumer prices and encouraging spending.
The move pushed the US dollar index to multi-month lows, boosting gold’s appeal as an alternative investment to the American currency and an inflation hedge.
Safe haven demand rose this week on speculation that Ireland may not be able to pass a new budget that aims to cut the nation’s massive deficit, which could force it to request financial aid from the European Union.
The debt frets caused the costs of ensuring Greek, Portuguese, Spanish and Irish debt against default to rise.
Gold last traded at US$1,416/oz. Silver and platinum reached US$28.30/oz and US$1,782/oz respectively.
Major mining stocks rallied today with gold producer Randgold Resources (LON:RRS) taking the lead in the sector in the FTSE 100 with a 4.3% advance. Peer African Barrick Gold (LON:ABG) added 1.6%.
Silver miner Fresnillo (LON:FRES) and platinum producer Lonmin (LON:LMI) climbed 2.8% and 1% respectively.
Gold miner Petropavlovsk (LON:POG) was the top performing midcap, surging 6.5%. Silver producer Hochschild Mining (LON:HOC) and Aquarius Platinum (LON:AQP) tacked on 4.6% and 1.5% respectively.
Fiji operating gold miner Vatukoula Gold Mines (LON:VGM) was among the top risers in the sector with a 13% gain. Philippines operating gold producer Medusa Mining (LON:MML, ASX:MML, TSX:MLL) followed, rising 9%.
South America focused gold miner Mariana Resources (LON:MARL) and Norseman Gold (LON:NGL, ASX:NGX), which operates Australia’s longest continuously running gold mining operation, added more than 6%.