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Gold climbs as physical demand remains strong

Gold rallied today, climbing close to US$1,190/oz despite today’s surge in the market. Precious metals were boosted by a slightly stronger safe haven demand and increased physical buying due to recent sharp falls in the price.

Friday’s economic data sent mixed signals, suggesting there could be further setbacks for the ongoing recovery and thus boosting the yellow metal’s safe haven appeal. While the University of Michigan consumer confidence index was revised upwards to 67.8 from a previous reading of 66.5 for July and the Chicago PMI (purchasing managers index) beat expectations with an improvement from 59.1 to 62.3 in July, Q2 US GDP failed to match expectations with a decline to 2.4% instead of the projected 2.5% and New York ISM index fell to 58.4 in July from 69.3 in June.

A survey by Bloomberg predicted an increase in gold prices this week due to higher physical demand spurred by the currently low prices that dipped below US$1,160/oz last week. Gold was weakened by the stress test results of European banks that showed just 7 failures.

Gold last traded at US$1,186/oz. Silver and platinum improved to US$18.38/oz and US$1,587/oz respectively.

Major mining stocks were on the rise today.

Platinum miner Lonmin (LON:LMI) led the sector in the FTSE 100 with a 4.2% gain. silver miner Fresnillo (LON:FRES) followed, advancing 3%, while gold miner Randgold Resources (LON:RRS) went against the tide, sliding 1%. African Barrick Gold (LON:ABG) stood just above the opening level.

Specialty chemicals firm Johnson Matthey (LON:JMAT) also posted a 3% gain.

Midcaps did even better with Aquarius Platinum (LON:AQP) and silver producer Hochschild Mining (LON:HOC) rallying 5%. Gold miner Petropavlovsk (LON:POG) added 3%.

Turkey focused gold miner Ariana Resources (LON:AAU) and Africa operating gold miner GMA Resources (LON:GMA) took the lead in the sector with each surging 22%. South American based explorer Mariana Resources (LON: MARL) and Uzbekistan focused gold miner Oxus Gold (LON:OXS) followed with gains of 7.5% and 6%.

Junior diamond miner Stellar Diamonds (LON:STEL) was in the red with a 10% loss. Gemstone producer Gemfields (LON:GEM) and Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (LON:CGH) lost more than 5%.