Monsters of Rock: Gold miners join iron ore and base metals in winner’s circle as investors run to safety
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Concerns about escalating conflict in Ukraine have sent gold bugs back into safe haven mode with investors pivoting towards bullion.
The precious metal is up over 10% across the past six months and has pushed higher due to the war between Russia and Ukraine, despite the first of as many of seven rate rises this year being announced by the US Fed last week.
Among those buying in are Ecuador, which squirrelled away US$158 million from local miners to stock up against geopolitical uncertainty in a bid to diversify its reserve bank holdings.
Metals trader Kitco says there has been a 10% surge in demand for the yellow metal since the start of 2022 after demand for bars and coins hit 1,124t in 2021 according to the World Gold Council, its highest level in a decade.
Australian gold stocks joined the bullish mood from other large miners today as prices hit US$1930/oz overnight. An ounce of gold was buying US$1936.50/oz or $2621.13 at 4.20pm AEDT.
Our largest goldie Newcrest Mining (ASX:NCM) was up 2.81% yesterday with virtually every major gold stock in the green.
It was a prosperous day for miners of all persuasions on the back of strong commodity prices and news China was further releasing the shackles on its moribund economy.
Its State Council decided yesterday to issue around US$175 billion in tax refunds for small businesses in a bid to stabilise the economy.
That was positive for commodity markets given China’s status as a major consumer of commodities including iron ore, lithium and base metals.
BHP (ASX:BHP) climbed more than 5%, which helped pulled the ASX200 materials sector, comprising the big miners, to a 3.34% gain.
Rio Tinto (ASX:RIO) and South32 (ASX:S32), two beneficiaries of the spike in aluminium prices after Australian banned exports to Russia, were also up big.
Lithium stocks and coal miners also closed the day higher, with Stanmore Resources (ASX:SMR) hitting an all time high and New Hope Corp (ASX:NHC) rising 8.53% after announcing a $250 million fully franked dividend including a 17c a share interim payout and 13c per share special divvie.
Record coal prices helped NHC swing from a $55.4m half year loss 12 months ago to a $330.4m half year profit in the first six months of 2021-22.