Rising dollar bats resource stocks

Resource stocks in general fell during the period Feb. 2-8, even as major U.S. stock indices gained. The Dow Jones Industrial Average picked up 1.6% over the period, closing at 10,724.63. Strength in the U.S. dollar hit all the commodities, and with oil prices falling, the stage was set for a rally in U.S. equity markets. An expected rate increase by the Federal Reserve, by a quarter-point to 2.5%, was more reassurance than remonstrance to the market.

That was a combination of factors that almost had to hurt gold, and the reaction of both bullion and stock markets didn’t disappoint. Gold prices came off US$9.80 over the period, and virtually all the precious metal equities posted losses.

The big boys all took hits: Newmont Mining was off US$1.04 at US$40.40, AngloGold Ashanti fell US$1.57 to US$1.57, Gold Fields backed up US63 to US$10.87, and Harmony Gold Mining slid US44 to US$7.74.

The slanging match between Gold Fields and Harmony continued, with Harmony denying suggestions it said Gold Fields Chief Executive Ian Cockerill made, in a Gold Fields conference call, that Harmony would increase its bid for Gold Fields to 1.5 Harmony shares from 1.25. Harmony boss Bernard Swanepoel said Harmony might resort to a creeping takeover of Gold Fields if the present offer, due to expire in mid-March, doesn’t net the required number of shares.

Base metals mining stocks followed metal prices downward, with Rio Tinto falling US$6.64, to US$123.11, Phelps Dodge diving US$3.16, to US$92.54, Freeport-McMoRan slipping US82, to US$36.25, and BHP Billiton off US30 at US$25.91.