Gold mining shares slid after the price of the precious metal hit a ten-month low as the dollar strengthened when the US Federal Reserve raised interest rates last night.
Gold was down as low as $1,135 an ounce as the dollar rose to a 14-year high after the Fed raised rates for the first time in a year and forecast three quarter-point increases next year rather than the expected two.
The FTSE 100 extended yesterday’s losses, but traded broadly flat, down 7.28 points to 6,941.91 as investors also awaited a monetary policy update from the Bank of England later. The FTSE 250 index was down 25.14 points to 17,657.24.
With dollar-denominated gold more expensive for other currency holders, proxies for the metal were also sold. The Mexican producer Fresnillo fell 9.3 per cent to £10.70, the biggest faller on the FTSE 100, and the African miner Randgold Resources was down 7.3 per cent to £55.10. Mid-cap listed peers Acacia Mining and Centamin also fell, 11.1 per cent to 353¼p and 8.7 per cent to 119¼p, while Hochschild Mining, 5.4 per cent down to below 300p, also said that production at its Pallancata silver mine in Peru had been temporarily suspended amid a dispute with locals over land access.
Copper prices shrugged off the stronger dollar amid the positive outlook for the US and Chinese economies, but its miners remained lower. The Chilean producer Antofagasta was down 2.7 per cent to 701½p.
Advertisement
Those equities boosted by the Fed’s hike were the banks, which tend to be benefit from higher interest rates. Royal Bank of Scotland rose 2.6 per cent to 223p and Barclays 2.5 per cent to 227¼p.
The top blue-chip riser was Centrica, up 4.3 per cent to 228¼p, after the owner of British Gas raised its annual profit forecast.
Among the smaller caps, the share registrar Equiniti Group was off 0.9 per cent to 185¼p after the US private equity firm Advent International offloaded its remaining 23.6 million shares, or 7.9 per cent holding. Equiniti floated in October last year at the bottom of its range at 165p a share, valuing the company at £495 million.