Market Report: Market turmoil has traders seeking safety in gold

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Investors rushed for cover today by snapping up shares that weren’t caught up in the global stock market carnage.

Those not selling everything that moved were buying shares in gold producers as the price of the metal — seen as a safe haven — rose $3.70 to $1095.60 an ounce, nipping above $1100 at one point for the first time in nine weeks.

Its rise came even as the US dollar improved, which made it more expensive to hold the precious metal, which is priced in the greenback.

Randgold Resources shone 90p or 2% higher at 4418p and was one of only two blue-chip risers — the other being Marks & Spencer as chief executive Marc Bolland quit the retailer. 

During last year’s sell-off, gold failed to rediscover its lustre and caused experts to question whether it had lost its safe haven appeal.

However, Investec said today: “We note, given global market turmoil, that gold is increasingly regaining its status as a safe haven.”

A little help from gradual US interest rate rises this year will also help gold to rise.

The FTSE 100 index tumbled 171.63 points, a near-3% slump, to 5901.71 as Chinese stocks again plummeted, triggering a trading halt.

The repercussions were felt mainly by miners since China is the world’s biggest consumer of raw materials.

Anglo American crashed another 23.55p to 246.85p, with a lower 225p target price from Barclays heaping more pressure on the already beaten-up stock.

The oil supermajors, including BP, down 14.1p at 329.35p, were not immune to the mayhem as Brent crude fell 97 cents to $33.27 a barrel — levels not seen since 2003.


The price of Brent crude sank to its lowest level in over a decade

On the mid-cap index, the miserable start to the year from AO World continued, down 8.4p to 139.6p, as traders bet that its third-quarter update on Tuesday will make for grim reading.

Elsewhere, Premier Farnell held firm, up 1.75p at 102.75p on whispers of a Chinese bid worth 160p a share for the struggling electronic parts distributor. 

On AIM, specialist HR consultancy Penna Consulting provided a rare piece of good news among the sea of red, 28.5p better off at 311p as it claimed full-year profits have “materially increased” after a strong third quarter.

Meanwhile, Sierra Leone diamond explorer Golden Saint Resources dropped back 9% to 0.03p after  it revealed its planned £250,000 crowdfunding would not happen after it failed to reach the £50,000 minimum.

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January 8, 2016 |
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