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The price of gold traded at a new record high of $1,107.12 an ounce on world markets today, in response to a weaker dollar.
Copper and other raw materials were also trading higher on the basis that a weaker greenback means buyers get more bangs for their buck.
Dealers say the outlook for metals like gold and copper remains bright with most of the big hedge funds having sold the dollar short in the belief that the US economy is in a worse state than many investors had thought. This was highlighted by Friday's non-farm payroll showing that total unemployment had reached 10.2% of the workforce — the worst for almost 30 years.
So when things turn sticky, the first refuge for any self-respecting investor is gold. That in turn is good news for the companies which dig the stuff out of the ground, such as Randgold Resources, 79p higher at 4673p, and Anglo American, up 44p at 2430p. But the clamour for other metals also lifted the likes of Rio Tinto, 66½p to 2983½p, Kazakhmys, 24p at 1237p, Xstrata, up 16½p at 979p, and Lonmin, 27p dearer at 1592p. Citigroup has, in turn, raised Antofagasta, 7½p better at 860½p, from hold to buy as well as Ferrexpo, 6¼p up at 165½p. It has also increased its target for Vedanta Resources, 31p up at 2292p, from 2300p to 2350p. The heavy weighting of mining companies among leading shares also helped lift the FTSE 100 Index 44.35 to 5187.07.
Banks were also a touch firmer with Royal Bank of Scotland adding 1.14p to 38.2p, while Barclays put on 5½p at 341½p.
Bid target Cadbury firmed 2p to 759½p as the deadline for Kraft's £10.2 billion bid, worth 740p a share, drew nearer. The institutions are believed to be holding out for at least 850p a share, but the absence of any counterbids means Kraft may choose to be less generous.
JP Morgan says that while US healthcare reform is still not finalised, the impact on pharmaceutical companies is likely to be moderate. Most companies have been shown to be fairly recession resistant. It sees significant scope for improvement from current levels in shares of all European large caps but with only 10% to 12% upside for UK operators such as GlaxoSmithKline, 4p firmer 1222½p, and AstraZeneca, 14p higher at 2711½p,. JPM has jacked-up its price target for Glaxo from 1050p to 1350p. Meanwhile, RBS has raised AstraZeneca from hold to buy. Also in the sector, Shire put on 42p at 1137p, making it one of the best blue chip performers.
New York shares ended the week just a touch higher with the Dow Jones up 17.46 points at 10,032.42.
Shares were trading higher at the start of the new working week in Asia, but some markets were doing better than others. In Tokyo, gains were modest with leading shares edging higher on the back of China-linked shares, such as Kubota which were up on hopes that Chinese economic indicators, due later this week, will be good.
But gains were limited by losses in banks. Mizuho Financial Group fell after Britain pressed the G20 to come up with a plan to make banks pay for any future bailouts.
The Nikkei 225 closed 19.64 higher at 9808.99.
Rohm fell 5.73% to 5920 (£39.15) after the chipmaker revised its profit forecast downwards. The company said it had revised down its annual group operating profit forecast from ¥22 billion to 16 billion for the financial year ending in March. Rohm cut its group recurring profit forecast to ¥14 billion from 22.50 billion yen.
NTT DoCoMo gained 1.8% to 131,000 after Japan's largest cellphone operator said it plans to spend up to 20 billion to buy back up to 160,000 of its own shares.
In Hong Kong, investors enjoyed strong gains with leading shares tracking firmer overseas markets with Chinese finance plays leading the rise.
“Abundant liquidity drove up local stocks but too much upside is unlikely especially when the index hovers above 22,000 mark,” said Ben Kwong at KGI Asia. He said the recent rally was unjustified by economic fundamentals.
The Hang Seng index rose to a two-week high of 22,139.71 before steadying at 22,063.16 at midday, up 233.44 points as it extended the previous session's 1.63% percent gain.
Dealers say Hong Kong assets look attractive given the territory's peg to a weak US dollar.
