Tuesday October 30, 1:04 pm Eastern Time
Gold stocks rise amid political uncertainty
(UPDATE: Adds background on Argentina, additional quotes. Updates share prices, index levels)
TORONTO, Oct 30 (Reuters) - A weakening U.S. dollar and growing concern of economic instability in Argentina pushed the shares of North America's biggest gold companies up more than 3 percent on Tuesday.
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Analysts said fears that Argentina, Latin America's No. 3 economy, could soon default on more than $130 billion of public debt was pushing investors into gold and gold related stocks, seen as a safe haven.
The slumping U.S. dollar added fuel to gold's move. If Argentina did default it would be another blow to the U.S. economy, which is already teetering on the edge of recession, because most of Argentina's bonds are U.S. dollar denominated.
Fears that the U.S. dollar could slip further if the United States falls into recession were also supporting the gold market.
Gold closed in London on Tuesday at $280.50 an ounce.
The Philadelphia gold and silver index (^XAU - news), home to some of North America's biggest precious metals stocks, was up 1.73 points, or 3.3 percent, at 54.75.
The Toronto Stock Exchange's (^TSE - news) gold and precious minerals index, which contains Canada's biggest gold miners, was up 169.63 points, or 3.5 percent, at 5,082.66.
In contrast, the Dow Jones industrial average (^DJI - news) was off 129.39 points, or 1.4 percent, at 9,140.11, while the Toronto Stock Exchange's 300 composite index was down 66.04 points, or 1 percent, at 6,830.30.
``It's unfortunate that gold is the vulture of the financial markets. When the equity market is dead on the ground, in steps gold,'' said George Topping, a mining analyst at Sprott Securities in Toronto.
In New York, Barrick Gold Corp. (NYSE:ABX - news) (Toronto:ABX.TO - news) was up 35 cents, or 2.2 percent, at $16.13, Newmont Mining Corp. (NYSE:NEM - news) was up $1.11, or 5.1 percent, at $22.77, and Placer Dome Inc. (NYSE:PDG - news) (Toronto:PDG.TO - news) was up 71 cents, or 6.5 percent, at $11.57.
In Toronto, Barrick was up 65 Canadian cents at C$25.50, Placer Dome was up C$1.16 at C$18.21 and Franco-Nevada Mining Corp Ltd. (Toronto:FN.TO - news) was ahead 75 Canadian cents at C$23.00.
Gold has been on a roller-coaster ride in the past six weeks since the Sept. 11 attacks on the United States as investors seek a safe haven amid political and economic uncertainty.
``The higher gold price that we are seeing may be based on a weakening global economic situation,'' one analyst told Reuters. ``But you have to remember that circumstances are much wider than just that, and all of this has been made worse by political tensions.''
($1 equals $1.57 Canadian)