Shares in FTSE 100 gold miners were battered this morning as prices of the yellow stuff fell to a 10-month low.
A dollar rally pushed spot gold prices down 1.23 per cent to $1,128.85 an ounce this morning, after the US Federal Reserve yesterday raised US interest rates from 0.5 to 0.75 per cent and set the scene for further monetary policy tightening next year.
The dollar index, which measures the currency against a basket of its major trading peers, climbed almost 0.7 per cent this morning – the highest level since 2002.
Gold miner Fresnillo was the biggest FTSE 100 faller this morning, with its share price taking a hit of 9.5 per cent to 1,068p, while Randgold Resources' stock fell 7.2 per cent to 5,507.5p. Russian gold producer Polymetal's shares were down 3.4 per cent to 778.25p.
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"Last night’s Fed rate hike and overall “hawkishness” appears to be the final nail in the coffin for this precious metals," said David Morrison, senior market strategist at Spreadco.
"Both gold and silver were the best performing assets in the first half of 2016, but how everything changes. Gold has broken below $1,130 and it’s hard to see anything (other than a collapse in the dollar) to prevent it retesting its multi-year low of $1,050 from last December."
The precious metal had already fallen sharply in the run-up to the Fed meeting after Republican candidate Donald Trump's victory in the US presidential election sparked a rally in the dollar and a rise in assets seen as higher risk, like stocks, at gold's expense. A week after the election, prices fell to a five-month low.
Shares in other miners, whose commodities are also dollar-denominated, such as Anglo American and Glencore, also fell this morning by 2.9 per cent and 2.8 per cent respectively.