Investors bolt back in to gold
INVESTORS ran for cover in gold yesterday as oil prices fell amid concerns about a UK exit from the EU.
The gold price glittered 0.38pc to $1,231 as jittery investors stocked up on the precious metal to shield themselves from continued market uncertainty.
Gold and silver miners were key beneficiaries of the flight to safety.
Randgold Resources twinkled 155p to 6355p and Fresnillo topped the FTSE 100 Index of risers with a 33p gain to 953.5p.
London Capital Group analyst Ipek Ozkardeskaya said: ‘Gold bounced higher as risk aversion vis-à-vis the world economy keeps investors seated on cash and increasingly on gold.’
However, some questioned the potential longevity of the love-in with the yellow metal. Jasper Lawler at CMC Markets said gold appeared to have turned a corner after racking up its sixth close above $1,200 an ounce since its surge on February 11.
But it came as a report showed the core US consumer price index rose by a bigger-thanexpected 0.3pc in January, raising the prospect of an interest rate hike.
Lawler said: ‘Its biggest risk is that stronger US inflation data starts to get corroborated by other parts of the economy, leading the market to shift its recent belief that the Federal Reserve will delay its next rate rise.’
Meanwhile, oil prices dropped about 3pc after a record increase in US stockpiles and a forecast by the US Energy Information Administration that production in the US Gulf of Mexico would hit an all-time high next year.
Oil giants BP and Royal Dutch Shell responded by falling 2.15p to 343.25p and 26.5p to 1560.5p respectively.
The Footsie fell 21.72 points to 5950.23 after hitting a two-week high in the previous session, rounding off its best week since October. But the pound fell despite higher UK retail sales as uncertainty about the timing and outcome of the UK’s planned referendum on EU membership unnerved investors.
Back in the equity markets, intellectual property investor Allied Minds ticked up 11.7p to 326.8p on vague market gossip about potential private equity interest in the company. Neil Woodford’s fund holds a 28pc stake in the group, which creates businesses based on university research discoveries.
Argos owner Home Retail, which is facing a £1.3bn takeover by supermarket chain Sainsbury’s, closed 1.6p down at 153.6p before it revealed that it had received a takeover approach.
South African group Steinhoff, which owns furniture retailers Harveys and Bensons For Beds in the UK, is considering a potential 175p per share offer for the group, which has already agreed to sell DIY chain Homebase. Sainsbury’s fell 2p to 261.1p.
Shares in bottling company Coca-Cola HBC fizzed 39p to 1413p after it reported a profit lift following a return to growth for the first time in five years in its established markets.
Engineering company Essentra, a mid-cap company supplying speciality plastic and packaging parts, gained 68p to 813.5p after strong full-year results.
Investors checked out of Millennium & Copthorne by 11p to 379p after the hotel group halved its dividend following a slump in fourth-quarter profits.
Tullow Oil leaked 9.8p to 160p after broker Cantor Fitzgerald said debt, over-dependence on the success of key projects and volatile commodity prices would remain of concern to investors. The African-focused oil explorer took a hit on Thursday after it flagged up technical issues on its giant Jubilee floating production, storage and off-take ship off the coast of Ghana.
Royal Bank of Scotland drifted 5.9p to 246p, Barclays backtracked 0.05p to 161.7p and Lloyds Banking Group reversed 0.64p to 61.8p ahead of a week of results from the sector, starting with HSBC on Monday. Shares in HSBC advanced a penny to 449.85p. Back with the miners, Australia and Tasmaniafocused miner Greatland Gold was 0.02p, or 41.67pc, richer at 0.08p as investors warmed to the stock after Metal Tiger chief executive Paul Johnson increased his holding to 4.12pc.
Tertiary Minerals relinquished 0.08p to 1.3p as investors took profits following the award of a mining permit at its Storuman fluorspar project in Sweden.
Victoria Oil & Gas was 4.38p, or 10.7pc, slicker at 45.25p as investors continued to applaud its announcement on Thursday that it had secured a 75pc stake in the Matanda block in Cameroon.
But Madagascar Oil continued to lose ground, shedding 0.5p to 0.88p, after it said earlier in the week that it may have to leave AIM as a condition of a potential short-term financing package.
Electronics distributor APC Technology lost its spark by 1.5p to 6.62p after it raised £1.3m in a share placing and subscription to fund growth plans.