Across The Border | Gold sparkles amid global gloom to brighten mining sector
As other assets slump, gold is on a roll, but views are mixed on whether it will hold up amid continuing economic uncertainty
Gold miners have struck it lucky so far this year. With equities and non-gold commodities tanking amid slow global trade and raw materials oversupply, investors have traded risky assets for defensive options, sending the gold price soaring.
Sentiment on Chinese gold related stocks improved considerably when trading resumed after the Lunar New Year, driven by the gold price rally, though they retreated slightly this week when gold weakened after some analysts questioned if the rally could continue.
In Shanghai, Shandong Gold Mining shares soared 32 per cent this month to hit a six-month high of 23.39 yuan (HK$27.94) on Tuesday before dropping to 22.63 yuan at the Wednesday morning close.
In Hong Kong, Zijin Mining is up 27 per cent this month to close at HK$2.19 on Wednesday morning, after hitting a eight-month high of HK$2.36 last Friday.
Their strong performance came as spot gold rallied, hitting a one-year high of US$1,263.48 per ounce on February 11, up 18 per cent for the year. That was a record 44 times the price of oil, according to Deutsche Bank. Bullion brokers GoldCore declared a bull market, and Nomura analysts said US$1,300 was on the cards.
However, the rally retreated this week after the stock market bounced back – minimising the appeal of gold as the traditional safe bet amid a slumping market.
