This morning saw some respite for gold investors as the yellow metal recovered somewhat following yesterday’s fall as the Dollar rebound curtailed overnight. The gold price has bounced off three weeks' lows to trade back above $1,030, December Comex futures reached an intraday high of $1,036 earlier this morning.
The gold price suffered throughout Wednesday’s session, as it continued to slide through the afternoon and evening gold broke below $1,030 to settle at $1,029. Wednesday’s decline took the gold market to a fifth consecutive daily fall, which is the yellow metals worst run since March.
The US dollar delivered another positive trading performance yesterday, as ‘risk’ money returned to the dollar from higher yielding currencies. The move followed after worse-than-expected US consumer confidence data raised doubts of US demand, which could stall a global recovery that has become increasingly priced into financial markets.
The London’s Intercontinental Exchange (ICE) the US Dollar Index has fallen steadily from the overnight high of 76.70 and currently stands at 76.30. The Dollar index represents the strength of the greenback against a basket of the 6 major global currencies.
Over the course of the last month, the weak US Dollar has provided a fundamental base to the rally over recent weeks but there is a definitive speculative element also. Among speculators, ‘Net-long’ trading remains at an all time high in the futures market. As such commentators claim that the initial dollar move and the declining yellow metal price triggered a round of profit taking to further pressure the Gold price.
Up until now, gold seemed to have had a persistent appeal over recent months as the record breaking rally was sustained over recent weeks to hold above historic levels. The recent all time high represents a 21% rise over the year to date. The most bullish analysts are expecting a sustained rally.
On the London Stock Exchange, equities were trading fairly unevenly. Gold producer Randgold Resources (LSE: RRS) rose marginally, Petropavlovsk (LSE: POG) followed adding 3%. Silver miner Hochschild Mining (LSE: HOC) was at the bottom of the pile with a 1% loss.
South American based explorer Mariana Resources (AIM: MARL) emerged as the top performer in the market for a second day in a row, surging 26% after climbing 10% yesterday on an announcement of a gold silver discovery at its Dos Calandrias project in Argentina.
Philippines focused Metals Exploration (AIM: MML) gained 7% after its Runruno gold-molybdenum project was endorsed by Philippines President.
Tajikistan operating gold miner Kryso Resources (AIM: KYS) also did well, climbing 5% on no news.
Australian gold and copper prospector Solomon Gold (AIM: SOLG) and Brazil focused gold miner Horizonte Minerals (AIM: HZM) led the fallers, shedding 8% and 7%.
Copper and gold miner EMED Mining (AIM: EMED), South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and South Africa focused emerging platinum producer Platmin (AIM: PPN) lost more than 4%, as did Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM).
Africa focused gold miner Pan African Resources (AIM: PAF), Asian focused explorer Central China Goldfields (AIM: GGG) and Turkey focused gold miner Ariana Resources (AIM: AAU) retreated 3.5%.