Given the dollars role in Gold’s ascent above $1,010 last week, the astute investor would not have been surprised by this mornings surge in the gold futures. The COMEX December gold contract burst through the $1,020 level this morning as the ICE Dollar Index fell persistently.
The dollar index represents the value of the US dollar against the 6 major currency crosses, the index has continued to make new lows throughout September and fell to 76.40 earlier today.
Forex commentators are attributing the weakening dollar to a broad based sell off in the US dollar, as investors reduce the cash element of their investments and re-enter higher risk asset classes following a re-evaluation of the stabilising global economy.
Elsewhere economists are also making a longer term case for gold investors a year on from the collapse of Lehman Brother and the unprecedented economic stimulus that followed. Central bankers world-wide have slashed borrowing costs and poured staggering amounts of liquidity into financial markets.
These landmark events saw the G20 introduce a combined $12 trillion, subsequently many economists have expectations of growing inflation further down the line. Economists argue that such substantial currency dilutions will continue to benefit Gold and other physical assets in the longer term.
North American Gold stocks were very strong across the board with several listings attaining 52 week high this morning.
Canadian-based Yamana Gold (NYSE: AUY) advanced almost 4%, multi-national gold producer Randgold Resources (NYSE:GOLD, LSE: RRS) also rose 4% on the open this morning, gaining $2.86 cents per share. Similarly Barrick Gold Corp (NYSE:ABX) also started the day positively gaining more than 2%.
Second-tier gold miners are generally strong following the increasing gold price, international gold producer IAM Gold (NYSE: IAG) hit a yearly high of $15.83, gaining more than 5% in early trading, New Gold (AMEX:NGD) has also started the day stronger, coming within a whisker of a 52 week high, up nearly 3% at $4.00. However, Agnico Eagle(NYSE:AEM) rose $1.30 to $71.80.
Junior gold stocks generally started the day strongly gaining impetus from the commodity market. South American focused exploration play Exeter Resource Corp (AMEX: XRA) continued with the strength of recent sessions recording a 52 week high of $5.24, the stock rose over 9% earlier today.
Nevsun Resources (AMEX: NSU) rose 7% in early deals, Mexican explorer Minefinders (AMEX: MFN) was also positive, gaining 4%. Keegan Resource Inc AMEX: KGN) rose 12 cents to $3.92, while Ontario based Rubicon (AMEX: RBY) was trading at $4.18, up 3% on the day. Eldorado Gold (TSX:ELD; NYSE:EGO) advanced 4% and Centamin Egypt (AIM: CEY, ASX: CNT, TSX: CEE) also positive on the day adding over 1½%.
Hawthorne Gold Corp (TSX-V:HGC) showed continuing strength, the Canadian based developer added 2% to recent gains. Fellow ‘Venture’ listed Victoria Gold Corp (TSX-V:VIT) rose more than 2.5%, while Timmins Gold Corp (TSX-V:TMM) were also positive gaining over 1% this morning.
Low-cost gold producer Gold Resource Corp (OTCBB: GORO) also gained over 2½%.