Gold rallies as US dollar falls ahead of FOMC
Gold rose sharply today as traders bought the yellow metal to protect wealth amid economic uncertainty in Europe.
Yesterday, safe haven demand got a boost from the Greek Prime Minister's unexpected decision to hold a referendum to approve the latest bailout plan, which calls for another round of unpopular austerity measures.
The move has thrown into doubt the success of last week's anti-crisis plan announced by the EU and raised fears that Greece will eventually default on its debt, leading to another recession in Europe.
Demand for gold was also aided by a decline in the US dollar, which is seen as an alternative asset to the yellow metal.
The American currency was hit by speculation that the Federal Reserve may hint at further stimulus measures to support the economy after today's policy meeting.
However, the Fed could delay a decision on further stimulus as the latest GDP data showed that the US economy is in better shape than thought.
Last week, the US Department of Commerce reported that economic growth accelerated to 2.5 percent in the September quarter from 1.3 percent in the previous three months.
Gold traded at US$1,743/oz this afternoon, up US$24 from Tuesday's close. Silver rallied 91 cents to US$34.36/oz and platinum advanced US$23 to US$1,611/oz.
Today's top risers in the sector were:
Caledonia Mining (LON:CMCL), up 11 percent at 9.15 pence at midday
Randgold Resources (LON:RRS), up 8 percent at 7,275 pence
Fresnillo (LON:FRES), up 8 percent at 1,786 pence
Chaarat Gold (LON:CGH), up 8 percent at 27.5 pence
The top fallers were:
Kolar Gold (LON:KGLD), down 12 percent at 14.75 pence at midday
Bezant Resources (LON:BZT), down 5 percent at 29.5 pence
Hummingbird Resources (LON:HUM), down 2.5 percent at 127 pence
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