The world’s largest miner, BHP Billiton, saw a 60% jump in the annual pre-tax profits of $31.3bn (18.9bn) as miners continue to benefit from investors piling into precious metals miners as a result of the recent bull run of commodities.
This follows last week’s heavy losses in the stock market led by steep decline in banking shares sparked record trade volumes in gold futures and option contracts. Soaring iron ore, copper and oil prices boosted profits whilst BHP Billiton’s shares rose 0.6% to £19.01. The impact of the commodity bull run of late has seen miners benefit despite BHP Billiton falling 17% so far this year on worries about global growth. Revenues increased by $18.9bn to $71.7bn, boosted by demand from India and China as well as rising output across its commodities.
Citigroup revises forecast of future gold price
After gold tipped above $1,900 an ounce in Europe as investors lost confidence in the markets hit by the US debt crisis and Eurozone turmoil, banks have adjusted their forecasts with some indicating that gold may reach $2,000 by the end of 2011.
“Increased global risk, US dollar weakness, growing inflationary fears, the USA debt downgrade and continuing sovereign debt risks in Europe have increased investor appetite for gold, triggering recent price strength,” said analysts at Citi.
Banks begin recovery as miners on the march
Miners resisted the stalling markets on the back of surging metal prices, largely assisted by investors gaining confidence from the positive outlooks given by banks. Gold miner Randgold Resources jumped 260p to £68.70 alongside silver miner, Fresnillo, which put on 69p to £20.39. As a result, the FTSE 100 gained 54.54 points to 5,095.3 and the FTSE 250 climbed 95.72 points to 9,854.78.
As the index attempted to catch up after the bank holiday, in contrast to last week RBS led the rise with Lloyds and Barclays posting impressive gains. This comes after more than £62bn was wiped off the value of the UK’s leading companies, leading to the heaviest fall in bank shares since the financial crisis of 2008.