Sector Snap: Gold miners surge as Fed unveils plan
NEW YORK (AP) — Shares of gold mining companies surged Thursday as gold prices hit a six-month high after the Federal Reserve unveiled a number of actions designed to re-energize the weak economy.
The Fed's open-ended measures should make it cheaper for consumers and businesses to borrow and spend.
The central bank will spend $40 billion a month to buy mortgage bonds for as long as it deems necessary to make home buying more affordable. It plans to keep short-term interest rates at record lows through mid-2015, which is six months longer that the previous deadline. The policymakers also are ready to approve additional economic aid if job growth remains weak.
The series of aggressive actions indicate how sluggish economic growth remains in the U.S. and globally, more than three years after the recession officially ended.
The news prompted investors to buy more gold, which often is used as a hedge against inflation. Gold for December delivery gained $38.40, or 2.2 percent, to end at $1,772.10 on the New York Mercantile Exchange. It was the highest price since March 1.
Higher gold prices can translate into better profits for gold mining companies.
In afternoon trading, shares of Barrick Gold Corp. rose $1.84, or 4.6 percent, to $41.55; Newmont Mining Corp. increased $2.89, or 5.5 percent, to $55.44; and Goldcorp Inc. was up $2.29, or 5.3 percent, to $45.34 and Kinross Gold Corp. gained 33 cents, or 3.5 percent, to $9.89.
