Gold miners jump as jitters prompt haven buying

Gold miners rallied on Tuesday as jitters from geopolitical risks whipped up investor demand for haven assets, pushing the price of the yellow metal higher.

The NYSE Arca gold miners index climbed 2.5 per cent for its biggest one-day gain since mid-March, with Barrick Gold shares rising 3.2 per cent to $20.09.

Newmont Mining rose 1.5 per cent to $35.13 while Kinross Gold jumped higher by 3.6 per cent to $3.72.

Tuesday’s advance came as the precious metal rose 1.6 per cent to $1,274.57 a troy ounce. Weakness in the US dollar, the currency in which gold is denominated, helped improve sentiment as it makes gold cheaper to foreign buyers.

The dollar index, a measure of the buck against a basket of peers, slid 0.3 per cent. Federal Reserve chair Janet Yellen’s remarks on Monday signalling a gradual pace in interest rate rises also helped lift gold, which offers no yield.

But it was concerns about geopolitics that bolstered the so-called fear trade with investors seeking the safety of the haven asset. Money managers are continuing to keep an eye on the upcoming French elections and watch the US stance towards Russia and North Korea.

US-Russia ties have grown increasingly strained since the US launched air strikes on a Syrian air base that was the launch pad of a suspected gas attack.

Russia criticised the US response and on Tuesday, Rex Tillerson, US secretary of state, urged Moscow to realign itself with the US.

Moreover, President Donald Trump reiterated on Tuesday that the US was prepared to act unilaterally against North Korea, with or without China’s support.

Looking at the equities market more broadly, investors shifted away from sectors that are considered to be riskier and into perceived havens. At the close, the S&P 500 was down 0.1 per cent at 2,353.8; the Dow Jones Industrial Average was little-changed at 20,651.3; and the Nasdaq Composite slipped 0.2 per cent to 5,866.8.

The technology and financials sectors, which are seen as sensitive to economic fluctuations, performed the worst.

Defensives bucked the bulk of the decline. Real estate rose 0.4 per cent, while utilities and consumer staples were up 0.1 per cent.

Elsewhere, United Continental lost ground on Tuesday as the airline remained stuck in the throes of its overbooking scandal and after it said its capacity rose more than initially expected in the first quarter.

The group ignited a firestorm of controversy earlier this week after video surfaced showing law enforcement officials forcibly dragging a passenger down the aisle of an aircraft.

The man was chosen to lose his seat as a result of overbooking but refused to follow the instructions of the crew.

United also late on Monday said it expected its capacity to have risen by 2.6 per cent year-on-year in the first quarter.

The airline had previously said it expected the closely watched figure to have climbed by 1-2 per cent. It also said that passenger unit revenue would likely be “approximately flat”.

The Chicago-based airline’s shares were down nearly 4 per cent earlier in the day, but ended Tuesday 1.1 per cent lower at $70.71.