Mainland gold stocks gave up much of their recent gains while oil stocks rose as investors became less risk-averse and more optimistic about the global economy after the United States unveiled plans to buy toxic assets from banks.
The plan to take over up to US$1 trillion in soured mortgage-backed securities has bolstered hopes that banks will resume normal lending and help lift the developed world out of recession.
The development has pushed gold prices lower. Gold was at US$920.40 per ounce in late-afternoon trade in London yesterday, down from US$937.15 late in New York on Monday. The metal's role as a safe haven has temporarily eroded since investors' appetite for riskier assets increased.
Gold had risen for a few days on expectations of weakness in the US dollar after Washington announced plans to buy more than US$1 trillion worth of government bonds and mortgage-backed securities.
The greenback has since weakened against most currencies. The 12-month yuan contract traded at 6.78 per dollar in Shanghai yesterday afternoon, the strongest since September 25, according to Bloomberg.
Gold stocks also followed the decline, led by Lingbao Gold's 7.97 per cent drop to HK$3.12, Zhaojin Mining Industry's 6.96 per cent decline to HK$10.70 and Zijin Mining Group's 6.52 per cent fall to HK$5.74.
Still, analysts are bullish on the medium-term outlook of gold prices.
