gold price surged higher on the first trading day of 2012

The gold price surged higher on the first trading day of 2012, rising $22.50 to $1,588 per ounce. While the price of gold finished up 10.0% in 2011, the yellow metal fell 10.4% in December, marking its second-worst month since the financial crisis of 2008.

Amid the turmoil in Europe, investors have sought refuge in the U.S. dollar – the world’s reserve currency – a development that has led to widespread liquidation in investments tied to the gold price. Gold stocks have been hit particularly hard as a result, evidenced by the 16.1% 2011 annual drop in the Market Vectors Gold Miners ETF (GDX). Barrick Gold (ABX), the world’s largest gold producer, retreated 14.0% last year. One of the best indicators of the sector’s dismal performance last year was that Newmont Mining (NEM) – the only gold stock included in the S&P 500 Index – fell 0.1% last year but was still one of the best-performing gold producers.