Gold finds a little solace in buoyant copper price amid Greek debt fears

After starting the day positively the gold price had eased lower by early afternoon, as Greek debt fears continue to weigh-down the Euro and spur on the US dollar. The gold price, which is negatively correlated to the greenback, has been rather subdued over recent weeks as forex investors favour the Dollar over the Euro, in turn reducing the investment value of gold. While these forex-driven influences rumble on, the gold price has been supported somewhat by more buoyant base metals such as copper.

The April Globex gold future on the Chicago Mercantile Exchange fell by US$1.5 to trade at the $1,117 level.

In the latest development the Euro has been sliding to nine-month lows against the dollar as concerns over the Greek public debt linger.  Delegates from both European Union and the European Central Bank (ECB) arrived in Athens today for meetings with the Greek finance minister, George Papaconstantinou. In a statement which followed the meeting Olli Rehn, the EU’s Monetary Affairs Commissioner, said that Greece must do more to reduce its deficit.

The meetings precede the publication of the Greek government’s new austerity programme, which is expected later this week.

Copper advanced over 5% today, as prices on the LME (London Metals Exchange) surged in the aftermath of the earthquake in Chile which interrupted copper production. In a note to investors, London-based stockbroker Fairfax said the earthquake in Chile has disrupted approximately 5 percent of the world’s copper production. Consequently, the analyst believes copper prices could spike to over US$7,500 per tonne.

LSE (London Stock Exchange) listed Anglo American, which halted production at 4 separate copper producing facilities, told the market it has begun to restart the ramp-up of production in Chile. The company said power was partially restored to the operations during Saturday night and following detailed inspections production began to ramp up on Sunday.

The LSE’s gold producers have generally shaken off the weaker price of the yellow metal, and instead investors have followed the trend of the broader mining sector. Randgold Resources (LSE: RRS) advanced more than 2% to change hands at 4,785p per share, similarly Petropavlovsk (LSE: POG) also climbed 2% and was trading at 961p. Among the other producers on the LSE main board, Centamin Egypt (LSE: CEY) gained over 4% and Yamana Gold (LSE: YAU) remained unmoved.

London’s silver miners were also buoyed by the broader mining sector. Mexico-based silver miner Fresnillo (LSE: FRES) rose around 4% to trade at 780p, while Hochschild (LSE: HOC) was also up marginally on the day.

On the AIM market, Mercator Gold (AIM: MCR) was the top-performing junior gold stock, as it surged over 18.2%. Elsewhere Medusa Mining (AIM: MML), Goldplat (AIM: GDP) and Metals Exploration (AIM: MTL) were all strong as well, each rising over 4%. Solomon Gold (AIM: SOLG) climbed 3%, the Australian-based explorer appointed a new chief operating officer to support the company’s expanding exploration and project development activities.

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