Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Gold finds support at $1,120 despite stronger US dollar, mining stocks mixed in London

Precious metals recovered today with gold reclaiming the US$1,120/oz after the earthquake in Chile drove up copper prices as investors were anticipating a supply shortage due to the damage to the mining infrastructure in the world’s largest producer of the base metal. Gains in copper supported other metals with movement in currency markets also factoring in.

Gold defied the trend of moving inversely to the US dollar, which extended gains on other major currencies today as the euro remained under pressure from Greece’s debt crisis and the pound was pushed down by uncertainties over the upcoming elections, raising questions about the country’s ability to find a solution to its own debt problem.

The Greek debt crisis has been dragging on for months to weigh down Europe’s single currency. Greece’s government worked out an economic austerity plan to cut the budget deficit by 3% to meet the European Union’s targets, sparking mass protests around the country. The country was urged to implement more austerity measures yesterday to seek further improvement in its current financial situation.

The instability in the currency markets boosts gold’s appeal as a safe haven for investors, driving up the demand and supporting the prices at the current level despite a stronger dollar.

Other precious metals tracked gains in gold as silver and platinum advanced to US$16.57/oz and US$1,557/oz respectively.

Miners were mixed today. Fresnillo (LSE: FRES) led the sector with a 2.6% gain after reporting record silver production for 2009. Gold miner Randgold Resources (LSE: RRS) rose 1.6%, but platinum producer Lonmin (LSE: LMI) went against the tide, posting a small loss.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) rose marginally.

Gold producer Petropavlovsk (LSE: POG) led the midcaps with a 1.2% advance. Aquarius Platinum (LSE: AQP) added less than 1%, while fellow FTSE 250 constituent, silver producer Hochschild Mining (LSE: HOC), lost nearly 1%.

Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) led the juniors with a 14% rally after announcing a preliminary gold resource for Ortacam zone at its Oksut project tin Turkey.

Africa operating gold miner GMA Resources (AIM: GMA) and Tajikistan operating gold miner Kryso Resources (AIM: KYS) followed, climbing 7.5% and 6.5% respectively.

Stellar Diamonds (AIM: STEL), Gemfields Resources (AIM: GEM) and commodity asset development company Mercator Gold (AIM: MCR) headed in the opposite direction, slipping 7%, 4.5% and 4% respectively.

www.proactiveinvestors.co.uk/companies/news/13923/gold-finds-support-at-1120-despite-stronger-us-dollar-mining-stocks-mixed-in-london-13923.html



Disclosure: The author holds no positions in the company