Gold Shrugs Off PPI

The minutes sparked a rally for stocks on Wall Street, as the Dow Jones Industrial Average jumped up 195 points, or 1.8%. For the shares of metals miners, there was double bonus, as the dollar dropped further against most currencies. The dollar index lost 0.4% on the day.

The Philadelphia Gold and Silver index rose 2.0%, the Amex Gold Bugs index was up 2.3%, and the CBOE Gold index advanced 1.8%.

Among the biggest gainers, shares of Gold Fields (GFI Quote) advanced 3.5%, Hecla Mining (HL Quote) rose 2.1%, and Coeur D'Alene (CDE Quote) rose 2.7%.

Precious and base metals have also been rising because of less somber reasons than bombings and economic slowdowns. These include strong global growth and demand, especially from Asia, and diminishing global supply. Yet even there, some concerns are lurking beneath the surface.

Freeport Mc-MoRan(FCX Quote), which posted stellar earnings on Tuesday, has had cause for concern about its Indonesian operations.

Protestors and social activists say Freeport Mc-MoRan's huge Grasberg gold and copper mine is hurting the Indonesian environment and that the company is not contributing to local development. The company had to shut down operations for three days in February amid clashes between protestors and its security personnel.

Those concerns didn't prevent the New Orleans-based mining giant from posting first-quarter earnings that almost doubled from the year earlier, easily beating analyst forecasts. Its shares gained 6.8% at $69.61, a new record high closing level. It earlier touched an all-time high of $70.68.

The stock rose on Monday after Indonesian president Susilo Bambang Yudhoyono refused to give in to the demands of protesters who want to close the Grasberg mine.

Still, because of these risks, Morningstar analyst Parvathy Krishnan keeps an "above-average" risk rating on the company and a fair value estimate of $38.00 on its shares. "We agree with management's description of Grasberg as a blessing and a curse," Krishnan writes.

Other mining companies, such as Denver-based Newmont Mining (NEM Quote), have also faced environmental and social conflicts recently. But on Monday, Peruvian workers at Newmont's Yanococha mine, Latin America's largest gold mine, ended a strike over higher benefits, according to Reuters. Newmont shares gained 1.5% on Tuesday.