Gold Gains as Latest $146B European Aid to Greece Fails to Comfort Investors


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Gold is gaining ground in morning trade Monday, as the latest European effort through a $146 billion package to aid Greece has not reduced investors' concerns about the debt situation in the euro zone. Such worries have bolstered investors' appetite for gold, which is near its highest level for 2010.

Still, the latest proposal by the Australian government to increase taxes on mining companies has already hurt the share price of major companies in the country, and could keep a lid on the yellow metal's gains.

At 0820 ET, gold is up nearly 0.2% at $1,182.90 an ounce, while silver is up 0.5% at $18.74, and copper is down 0.5% at $332.25 a pound.

Australian Prime Minister Kevin Rudd proposed over the weekend to impose a 40% tax on profits of mining giants such as BHP Billiton Ltd ( BHP ) and Rio Tinto Ltd ( RIO ) that have benefited greatly from surging demand for base metals from India and China in particular over the past few years. The plan is to introduce the taxes in 2010 and is expected to raise about $8.3 billion per year. Still, the proposal has not only met with stiff opposition from the opposition Liberal-National coalition leader Tony Abbott, but share prices of major miners have tumbled too on the news. BHP closed Monday nearly 3% lower, while Rio Tinto tumbled 4.3%.

In other corporate news, Norway's Norsk Hydro ASA ( NHY ) said Sunday that it will pay $4.9 billion for Brazilian mining group Vale SA's ( VALE ) aluminum operations. The deal is the largest international acquisition by a Norwegian company, and will be funded in part by a rights issue of $1.75 billion. Under the agreement, Vale will receive $1.1 billion in cash and new shares in Hydro for a 22% stake. Based on Friday's closing price, the deal is worth about $4.9 billion.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Commodities
More Headlines for: BHP , NHY , RIO , VALE

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