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Gold reclaims $1,100 as US Dollar shows weakness ahead of US home sales update

Obama’s plans to tighten banking regulations toppled commodities last week, pushing gold down to a one month low at below US$1,100/oz, while the US Dollar showed weakness before today’s US existing home sales update, which is expected to show a decline of the number of existing homes sold.

The US Dollar index, which measures the greenback’s strength against a basket of six currencies, was down 0.3% today, with profit taking following last week’s rally also factoring in. The American currency was later supported by reports that Ben Bernanke would secure confirmation for a second term as Fed Chairman from the US Senate later in the week.

The yellow metal returned to US$1,100/oz, while silver climbed to US$17.13/oz and platinum, which has recently rallied on anticipated higher demand from newly established PGM (platinum group of metals) based exchange funds, moved down to US$1,539/oz.

Mining stocks were higher in London with platinum producers leading the way.

Platinum miner Lonmin (LSE: LMI) was in the lead with a 2.5% gain. Gold producer Randgold Resources (LSE: RRS) and silver miner Fresnillo (LSE: FRES) rose marginally.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) was flat.

Aquarius Platinum (LSE: AQP) was the top performer in the sector in the FTSE 250 with a 2.4% improvement. Silver producer Hochschild Mining (LSE: HOC) added slightly less than 1%, while gold miner Petropavlovsk (LSE: POG) made little headway.

Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) was the top performer among the juniors, gaining 7.5% after reporting new mineralisations at its flagship Vatukoula mine. Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) and Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) followed, climbing 6.7%.

Turkey focused gold miner Ariana Resources (AIM: AAU) and Brazil focused gold miner Horizonte Minerals (AIM: HZM) headed in the opposite direction, shedding 7% and 4.5% respectively.

Disclosure: The author holds no positions in the company