IT WAS a nightmare day for most of the market, but for Australia's gold producers the news was doubly sweet.
Not only did gold prices continue their rise on the back of economic jitters, but a softening in the Australian dollar amplified the warm glow for local producers, pushing a number of share prices strongly higher.
In keeping with its safe-haven status in times of trouble, the gold price rose close to 4 per cent over the past six days to hover around $US1620 an ounce last night.
Over the same period the Australian dollar has fallen by more than 2? against the US dollar, meaning the gold price in Australian terms has risen from about $1544 an ounce to $1675 an ounce last night.
That combination of factors was enough to end Newcrest Mining's recent horror run, pushing shares in Australia's largest listed gold miner up by 42? to $24.53.
Smaller gold producers enjoyed much bigger gains, with Kingsgate Consolidated rising by almost 4 per cent, Evolution Mining rising by more than 5 per cent, Integra Mining more than 6 per cent, Perseus Mining by more than 7 per cent and Unity Mining by more than 8 per cent.
Mike Harrowell from BBY described the combination of the rising gold price and easing Australian dollar as a "double whammy" for those stocks, and he predicted margins in the gold production business could get even fatter over the next three months.
"We wouldn't be surprised to see gold test the $US2000 mark," he said.
But despite the gains by Newcrest, analysts at Goldman Sachs were unimpressed, describing the 1.74 per cent gain as a "poor effort" compared with the 6 per cent and 7 per cent gains made by big goldminers such as Newmont and Barrick on foreign markets on Friday night.
The impact of the weakening currency on local miners was highlighted by the Reserve Bank in its recent monthly report on commodity prices: it noted the commodity price index improved by 0.9 per cent during May on Australian dollar terms, despite falling by 1.9 per cent on face value.
The performance of the gold stocks yesterday was at odds with the rest of the mining sector, with BHP Billiton falling by 98? to $30.75 while Rio Tinto suffered an even bigger slump, losing $2.63 to close at $52.90.
BHP's fall below $31 saw a derivative offered by Citigroup terminated, while iron ore stocks Fortescue Metals Group and Atlas Iron shed almost 5 per cent and 6 per cent respectively.