Market News

The FTSE 100 made modest headway on Monday, supported by fresh gains in mining stocks as gold and silver prices hit new highs.

The FTSE 100 index closed up 5.41 points, 0.1%, at 10,148.85.

The FTSE 250 ended 34.13 points higher, 0.2%, at 23,351.66, and the Aim All-Share closed up 5.74 points, 0.7%, at 828.49.

Miners Fresnillo, Antofagasta and Endeavour led blue-chip risers, up 6.7%, 5.3% and 4.0%, amid strength in metals prices.

Gold was quoted at 5,095.11 dollars an ounce on Monday, after hitting another record high, and up from 4,984.07 dollars on Friday.

Meanwhile, the price of silver leapt 10%, pushing well above the 100 dollar an ounce landmark it hit late on Friday.

Russ Mould at AJ Bell noted: “In less than 18 months bullion has more than doubled in value – buoyed by central bank demand, global turmoil, dollar weakness, and the diminished appeal of other popular defensive assets.”

Tom Stevenson, investment director at Fidelity International, said the yellow metal is the “ultimate risk-off safe haven – and investors have found plenty to worry about so far this year.”

“With government bonds – the traditional safe haven – falling out of favour as concerns mount about the high levels of borrowing around the world… gold has become the go-to for risk averse investors,” he pointed out.

The latest moves came amid increased uncertainty in the US with Mr Mould noting the odds of another US government shutdown have increased as Democrats say they will block the federal spending package over the fallout from the Trump administration’s immigration crackdown.

Wells Fargo said the odds of a government shutdown starting on January 31 have risen sharply.

“Polymarket traders price the odds of a shutdown starting this Saturday at roughly 80%… which strikes us as reasonable based on what we know now,” the broker said.

“Should another extended shutdown occur, it would leave the FOMC in a tricky spot.

“The lack of visibility that arises from receiving limited economic data could thrust an already divided FOMC into a period of stasis.

“Fed officials lamented the lack of clarity on inflation during the last shutdown. We expect they would again use this argument to delay additional cuts.”

The political uncertainty plus speculation of intervention to support the yen sparked further dollar weakness.

ING noted widespread discussion late on Friday that the Federal Reserve started asking banks in New York about their position sizes in USD/JPY, akin to a “rate check”, where a central bank might be preparing the market for physical intervention.

“That the Fed was allegedly doing this and not making clear that this activity was purely on behalf of Japanese authorities”, has led to “understandable suggestions that the US might be on the verge of joint intervention with Japan,” ING said.