It can! Is there a rocky spot that won't work with the golden shovel? I changed the way dig spots work so I could've missed one somewher
I double checked these and they should be fine. Make sure you are playing on the latest build: Beta 1.2.02 (you may be on 1.2.01)
There was a glitch where the shovel wasn't working properly but this latest update fixes it. You just need to make sure you walk around Valencia for the game to automatically correct the glitch on your save file. Hope this helps =)