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Categorized | Currencies

Gold miners end best month since 1998

Posted on February 29, 2016

Gold miners posted their best monthly performance in nearly 18 years after the yellow metal, a haven asset, has benefited from market turmoil.

The NYSE Arca gold miners index, which includes global mining companies like Barrick Gold, Goldcorp, Randgold Resources and 36 other companies, rose 38.7 per cent in February, its biggest monthly gain since September 1998.

    New York listed shares in Barrick Gold rallied 40.3 per cent for the month, Newmont Mining shares climbed 29.5 per cent, Goldcorp shares climbed 26.5 per cent, while shares in Kinross Gold jumped 78 per cent.

    The rally in gold miners comes as the precious metal’s 1.2 per cent gain on Monday took its monthly advance to 10.7 per cent for February — and on track for its best monthly performance since January 2012.

    “Gold has been seen as portable, liquid, convertible to any currency and so investors have flowed funds into ETF products and some mining indices,” said George Gero, senior vice-president with RBC Wealth Management.

    A string of lacklustre US economic data has delayed expectations for Federal Reserve rate increases this year. That has pressured the dollar against many rivals, in turn buoying investor sentiment for gold. Weakness in the dollar, the currency in which gold is denominated, makes it cheaper for foreign buyers.

    However, Robin Bhar, an analyst at Société Générale said: “The recent stabilisation in global financial markets has caused the market probability of a 25 basis-point Fed rate raise by December 2016 to recover partially to around 50 per cent, which the gold price has yet to react to.’’

    Higher metals prices helped the S&P 500 metals and mining index advance 23.8 per cent over the month, leaving the sector on course for its best month since April 1999.

    Elsewhere, shares in Signet Jewelers jumped 9.4 per cent to $108.40 on Monday after reporting better than expected fourth-quarter profits.

    The Bermuda-based retailer, which operates Kay Jewelers and Zales, reported adjusted earnings of $3.63 per share, ahead of analysts’ expectation for $3.59.

    Signet’s board also approved a new $750m share repurchase programme and announced an 18 per cent increase in its dividend.

    Shares in Valeant Pharmaceuticals fell 18.4 per cent to $65.78 as the drugmaker postponed its conference call to discuss fourth-quarter results and withdrew its previous financial guidance. Valeant also said chief executive Michael Pearson was returning to work after taking medical leave.

    Consol Energy shares jumped more than 10 per cent to $8.63 after announcing plans to sell a coal mine in southwestern Virgina and plans to suspend its dividend.

    The S&P 500 ended the month lower for the third month in a row. The benchmark index fell 0.8 per cent on Monday, bringing it to a narrow loss of 0.4 per cent over the month. The Dow Jones Industrial Average gained 0.3 per cent to 16,516.50 over the month while the Nasdaq Composite fell 1.2 per cent to 4,557.95.