Covid vaccine hopes wipe the shine off gold miners
THE shine came off gold prices as the latest rollout of Covid vaccines boosted hopes markets will stabilise and an economic recovery is on the way.
Spot gold, or the amount you would pay upfront for an ounce, fell yesterday to below $1,830.
It was another reverse in a rally that began at the start of this month when second waves hit Western countries.
The fall came as an intensive care nurse in Long Island, New York, became the first person in the US to receive the Pfizer vaccine, and Canada also began offering the jab.
In July gold prices shot to record highs and broke through the $2,000 an ounce mark for the first time ever.
The yellow metal rocketed in value during the Covid crisis that first sent markets into turmoil in late February, because gold is seen as a safe way for an investor to store value during times of economic uncertainty.
Although it is still early days for the vaccines, investors are optimistic that they will be the quickest way for daily life to get back to normal. Added to this is a possible £675bn stimulus plan being mooted by politicians in the US and growing chatter that the UK and EU are close to striking a Brexit deal.
Precious metals miners, which have been some of the best performing stocks on the FTSE 100 and FTSE 250, tipped into the red.
Russian gold miner Polymetal slid 5.2pc, or 89p, to 1615p, while Fresnillo fell 0.8pc, or 8.5p, to 1117.5p, Hochschild Mining slumped 3.6pc, or 7p, to 187.2p and Centamin dropped 2.7pc, or 3.25p, to 119.1p. The wider Footsie also started the week on the back foot, with falls in hospitality, mining and oil stocks cancelling out gains among housebuilders and banks.
Natwest (up 5pc, or 7.5p, to 157.85p), Persimmon (up 4.9pc, or 121p, to 2584p) and Lloyds Banking Group (up 4.9pc, or 1.66p, to 35.73p) were among the top risers, in a reversal of Friday’s declines.
The FTSE 100 fell 0.23pc, or 14.92 points, to 6531.83.
But the mid-cap FTSE 250 rose 0.72pc, or 141.87 points, to 19,764.02, as hopes grew that the UK would be able to make an amicable exit from the EU after trade talks were extended yet again and EU Commission president Ursula von der Leyen said there had been ‘movement’ in the negotiations.
Because the FTSE 250 is domestically focused, it is considered a barometer for Brexit sentiment.
The index was also aided by an 11.4pc jump in Polypipe shares.
The UK’s largest plastic pipe maker rose by 52p to 509p after it upgraded its profit forecasts for the second time in a month.
This was driven by housing construction ploughing ahead during the second nationwide lockdown in England in November, as well as homeowners splashing out on home renovations and DIY.
Music investment group Hipgnosis Songs Fund failed to strike a chord with investors despite one of its songs, Mariah Carey’s festive classic All I Want For Christmas Is You, reaching number one on the UK singles chart.
It was the first time the song, which Hipgnosis bought in September, hit the UK’s number one spot in its 26-year history after it was streamed 10.8m times in just seven days. Hipgnosis fell 0.4pc, or 0.5p, to 122p.
Mid- cap contractor Capita fell out of favour after finally agreeing to sell its education software arm ESS. It was thought to be worth around £500m and helps schools do everything from recording student attendance to managing lunch payments.
But shares slid 1pc, or 0.45p, to 44.91p after it sealed a deal worth a much lower £400m with private equity group Montagu.