Gold rallies on safe haven demand
Gold rallied this afternoon as traders bought the yellow metal to protect wealth amid economic uncertainty in Europe.
Demand for gold and other safe haven assets such as the US dollar got a boost after yields on Italian 10-year bonds reached 6.7 percent. This is dangerously close to the psychologically significant level of seven percent, which was reached by Ireland, Portugal and Greece before they were bailed out.
The surge in bond yields came amid fears of a political crisis in the country, which could deliver a blow to its efforts to curb spending and balance its budget to be able to service its mountainous debt.
Prime Minister Silvio Berlusconi is facing a series of crucial votes in the parliament that are expected to decide the fate of his government. Tomorrow's budget vote will determine whether Berlusconi has enough support within his coalition to impose further austerity measures.
Today's increase in the price of gold of over US$30 came despite a stronger US dollar, which is seen as an alternative investment to gold.
Gold traded at US$1,778/oz this afternoon, up US$24 from Friday's close. Silver rallied 49 cents to US$34.62/oz and platinum advanced US$13 to US$1,646/oz.
Today's top risers in the sector were:
Caledonia Mining (LON:CMCL), up 9.5 percent at 5.75 pence at midday
Angel Mining (LON:ANGM), up 6.5 percent at 1.33 pence
Patagonia Gold (LON:PGD), up 6 percent at 55.25 pence
Condor Resources (LON:CNR), up 5 percent at 8.15 pence
Conroy Gold and Natural Resources (LON:CGNR), up 4 percent at 3.25 pence
The top fallers were:
Kryso Resources (LON:KYS), down 13.5 percent at 27.62 pence at midday
Alecto Minerals (LON:ALO), down 10 percent at 1.8 pence
Greatland Gold (LON:GGP), down 8 percent at 1.2 pence
Metals Exploration (LON:MTL), down 6.5 percent at 12.25pence
Arian Silver (LON:AGQ), down 5.5 percent at 21.5 pence
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