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Gold sets new record highs on risk aversion

Published: 11:09 15 Sep 2010 EDT

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Gold was slightly lower today shortly after posting fresh record highs at over US$1,270/oz. Traders were dumping gold to reap profits following yet another surge in the precious metal, which was sparked by the latest wave of concerns over the pace of the ongoing economic recovery, leading to an increase in safe haven demand.

It was reported earlier this week that Germany’s ZEW investor confidence index slipped from 14 in August to -4.3, while euro zone industrial production showed no change from July instead of an expected 0.2% increase.

Gold prices have also benefitted from a falling US dollar, which is perceived as an alternative asset. However, the American currency bounced back today, rising against the yen and the euro after the Japanese government decided to sell a trillion yen to halt the national currency’s surge.

Japan’s Nikkei 225 index added more than 2% on the news.

Gold retreated to US$1,268/oz, while silver and platinum rose to US$20.50/oz and US$1,592/oz respectively.

Major mining stocks were in decline. Silver miner Fresnillo (LON:FRES) and gold miner Randgold Resources (LON:RRS) posted small losses, while platinum producer Lonmin (LON:LMI) dropped 1.7% and another gold miner African Barrick Gold (LON:ABG) retreated 2.6%.

Specialty chemicals firm Johnson Matthey (LON:JMAT) added nearly 1%.

Midcaps did better with gold miner Petropavlovsk (LON:POG) and Aquarius Platinum (LON:AQP) advancing 4.2% and 2.3% respectively. Silver producer Hochschild Mining (LON:HOC) added 1.6%.

South American focused mineral exploration and development company Minera IRL (LON:MIRL) was among the leading risers in the sector with a 12% advance. Investment holding company focused on gold and copper-gold prospects in Chile and Argentina, Mariana Resources (LON:MARL) followed with a 10.5% rally.

South America focused gold and silver explorer Patagonia Gold (LON:PGD) surged 8.5%.

Australia operating mining exploration company GGG Resources (LON:GGG) and owner of the Vatukoula Gold Mine in Fiji, Vatukoula Gold Miners (LON:VGM) added more than 7%.

Turkey and Saudi Arabia focused exploration company KEFI Minerals (LON:KEFI) also did well, tacking on 6.5%.

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