Gold extends gains as euro keeps rising on Greek bailout agreement

Gold extended gains as the euro continued its rise against the US dollar on increased optimism about the European debt crisis following last week’s EU agreement on an aid package for debt laden Greece. Last Friday, leaders of euro zone countries agreed to put together a bailout package jointly with the IMF (International Monetary Fund) if the country fails to raise enough money in the market to avoid a default. The agreement provided immediate relief for Europe’s single currency, which has been pressured by concerns over Greece’s fiscal problems for weeks.
The US dollar was further weakened by today’s ADP employment report, which showed a loss of 23,000 jobs in the private sector, while an increase was expected.
Gold is seen as a riskier alternative to the safe-haven US dollar and usually moves inversely to the American currency.
More data is expected today with investors eyeing the Chicago PMI (Purchasing Managers Index), New York ISM index and US factory orders for February.
Spot gold reached US$1,115/oz today. Other precious metals followed with silver and platinum rising to US$17.55/oz and US$1,643/oz respectively.
Major mining stocks were mixed. Gold producer Randgold Resources (LSE: RRS) climbed 1.6% to take the lead in the sector in the FTSE 100, while silver miner Fresnillo (LSE: FRES) followed with a 1% advance. Platinum producer Lonmin (LSE: LMI) made little headway.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) tacked on less than 1%.
Gold miner Petropavlovsk (LSE: POG) was the leading performer among the midcaps with a 1.1% climb. Aquarius Platinum (LSE: AQP) posted a marginal gain, while silver producer Hochschild Mining (LSE: HOC) declined 2.2%.
Russia focused Ovoca Gold (LSE: OVG) led the small caps with a 6.5% gain after releasing an operational update. South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) slipped 16% after releasing its interim results, while Africa operating gold miner GMA Resources (AIM: GMA) lost 8.7%. Brazil focused gold miner Horizonte Minerals (AIM: HZM) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) lost more than 5%.

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