Miners Go Gangbusters as Metals Rally, Dollar Drop Spark Reboundby
Gold breaks through 200-day average first time since October
First Quantum, Newmont lead gain in Americas mining gauge
Mining companies that have been pummeled by faltering Chinese demand surged the most in five months as a rally in metal prices signaled production cuts are starting to pay off.
First Quantum Minerals Ltd., Newmont Mining Corp. and Freeport-McMoRan Inc. led gains in the Bloomberg Americas Mining Index, which added 7 percent in the biggest increase since Aug. 27. Zinc rose for a fourth straight session as copper, aluminum, nickel, lead and tin advanced in London, helped by the outlook for tighter supplies and a plunge in the dollar, which bolsters the appeal of metals as alternative investments.
“It’s strength across the board,” Garrett Nelson, an analyst at BB&T Capital Markets, said by telephone from Richmond, Virginia. “The dollar’s down a lot and commodity prices are up so the equities are up also.”
Industrial metals slumped 27 percent last year as China’s economic slowdown heightened demand concerns, prompting mining companies including Freeport to shutter output. Shares of Phoenix-based Freeport, the biggest publicly traded copper producer, gained 11 percent at 4:03 p.m. in New York. Vancouver-based First Quantum advanced 14 percent in Toronto.
Newmont climbed 11 percent in New York, the biggest gain since November 2008. Greenwood Village, Colorado-based Newmont, the biggest U.S. gold producer, was helped by bullion prices that jumped to a three-month high on Wednesday.
Gold futures broke above the 200-day moving average for the first time since October, a level considered bullish by traders who follow chart patterns, Barry Allan, an analyst with Mackie Research Capital Corp. in Toronto, said by e-mail.