Gold returns to $1,120 as US dollar slips ahead of Bernanke testimony

Gold returned to US$1,125/oz this morning after the US dollar showed weakness, though failed to hold on to this level, sliding down to US$1,120/oz later after the European currency fell against the greenback on renewed jitters over Greece’s debt situation.
Gold moves inversely to the US dollar, representing a riskier investment alternative.
The US dollar remained under pressure following last week’s move by the Federal Reserve, which hiked the discount rate, which it charges banks for emergency loans, by 25 basis points to 0.75%, which was interpreted as a sign that the anticipated tightening of US monetary policy could come sooner than expected.
Fed Chairman Ben Bernanke is set to appear before the US Congress this Wednesday to deliver his annual Humphrey-Hawkins testimony, which will be closely watched following the discount rate increase.
Meanwhile, the outlook for Greece’s debt crisis was further muddied today to put pressure on the euro. The European Commission said there was no plan to put together a €20-25 billion bailout package for Greece and Germany, which was reportedly preparing an aid package for the debt laden country, said it was undecided on the issue.
Greek Prime Minister George Papandreou told the BBC today that his country was not looking for financial, but rather for political support.
Other precious metals advanced with silver and platinum reaching US$16.42/oz and US$1,536/oz respectively.
Most mining stocks were on the rise today. Midcap silver producer Hochschild Mining (LSE: HOC) was an exception, shedding almost 1%.
Silver and gold miner Fresnillo (LSE: FRES) was in the lead among the blue chips with a 2.3% advance. Gold miner Randgold Resources (LSE: RRS) and platinum producer Lonmin (LSE: LMI) both added 1%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) rose marginally.
In the FTSE 250, gold miner Petropavlovsk (LSE: POG) rallied 2.7%, while Aquarius Platinum (LSE: AQP) was up 1%.
Stellar Diamonds (AIM: STEL) led the juniors with a 13% surge on its first day of trading. UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) and Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (AIM: CGH) followed, climbing 9.5% and 7.5% respectively.
Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) advanced 5% and South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and Gemfields Resources (AIM: GEM) both added 4.5%.
Commodity asset development company Mercator Gold (AIM: MCR) and Turkey focused gold miner Ariana Resources (AIM: AAU) were in decline with losses of about 4%.

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