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Gold returns to $1,080 as EU leaders reach decision on Greece rescue plan

Gold returned to yesterday’s levels after falling late on Wednesday on comments from Fed Chairman Ben Bernanke, who said that monetary policy would likely be tightened and cash pulled back from the economy before the currently ultra low interest rates are increased.

March futures for the US Dollar climbed to 80.08 on the ICE Exchange following Bernanke’s speech, sending gold, which moves inversely to the greenback, down to US$1,065/oz. Earlier in the day, the yellow metal climbed to US$1,080/oz after the euro strengthened against the US Dollar on reports that Germany was preparing an aid package for debt laden Greece.

The EU summit that kicked off today did focus on resolving the debt crisis and supporting the euro, that absorbed a hard hit from the debt issues surrounding Greece and several other euro zone countries, including Spain and Portugal. It was announced that a deal to aid Greece was reached, though no further information was given.

Gold improved to US$1,079.5/oz following the announcement.

Other precious metals followed as silver and platinum reached US$15.37/oz and US$1,516/oz respectively.

Mining stocks were on the rise today. Silver and gold miner Fresnillo (LSE: FRES) led the sector in the FTSE 100 with a 3.4% advance, Platinum producer Lonmin (LSE: LMI) and gold miner Randgold Resources (LSE: RRS) climbed 2.5% and 2%.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) also added 2.5%.

In the FTSE 250, gold miner Petropavlovsk (LSE: POG) rose 4.2% for the lead, while Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) followed with gains of 1.5% and less than 1% respectively.

Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) led the juniors with a 17.5% rally. Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) and Philippines focused gold producer Medusa Mining (AIM&ASX: MML) also performed well with each tacking on 6.3%.

UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG), South American based explorer Mariana Resources (AIM: MARL) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS), which today updates the market on its progress at the Amantaytau Goldfields joint venture  in Uzbekistan, all climbed 4.5%.

Australian gold and copper prospector Solomon Gold (AIM: SOLG) and Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) were up 4%.



Disclosure: The author holds no positions