Gold prices surged today as the US Dollar extended losses against the euro after concerns over Greece’s debt situation, which have been pushing Europe’s single currency down so far this year, eased in anticipation of the European Commission’s acceptable of the Greek government’s plan to cut the growing budget deficit from the current level of 13% of the GDP to 3%.
The US Dollar index, which measures the greenback’s strength against a basket of six currencies, posted a small decline today.
The appeal of the yellow metal as a riskier asset increased following yesterday’s report from the Institute of Supply Management (ISM), which said that its purchasing managers index (PMI) increased to 58.4 in January from 54.9 in December, signalling higher manufacturing activity and prompting investors to put money in riskier assets with higher returns.
Spot gold prices reached US$1,111/oz, while silver and platinum improved to US$16.70/oz and US$1,554/oz respectively.
Miners were on the rise today. In the FTSE 100, gold producer Randgold Resources (LSE: RRS) and silver and gold miner Fresnillo (LSE: FRES) both added more than 2%, while platinum miner Lonmin (LSE: LMI) took the lead with a gain of nearly 3.5%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) made little headway.
Aquarius Platinum (LSE: AQP) was the top performers among the midcaps with a 4% climb. Gold miner Petropavlovsk (LSE: POG) was close with a 3.3% gain, while silver producer Hochschild Mining (LSE: HOC) was up 1.5%.
Western Australia operating Norseman Gold (AIM: NGL) led the juniors with a gain of more than 7%. South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and African focused nickel and gold exploration and development junior Nyota Minerals (ASX&AIM: NYO) followed, tacking on 5.5%. Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) rose 3%.
London listed Australian gold producer Leyshon Resources (AIM: LRL) and Australian gold and copper prospector Solomon Gold (AIM: SOLG) headed in the opposite direction, shedding 4.5% and 3.5% respectively.
Disclosure: The author holds no positions