On Friday, the price of gold dropped to the lowest level since April 2010 after the Fed said the world’s largest economy favours a rate rise this year which boosted the dollar and Chinese disclosure about its gold holdings disappointed the market.
Futures contracts in New York with August delivery dates were trading at $1,131.20 an ounce in afternoon trade, down more than 1% from yesterday’s close in a second day of losses.
The gold market has turned overwhelmingly bearish with large gold futures investors such as hedge funds slashing long positions – betting on a rising price – to less than 1m ounces, the lowest in at least nine years. At the same time speculators’ short positions – bets that gold could be bought cheaper in the future – jumped to all-time record highs.
Gold’s weakness led to a brutal sell-off among the world’s top gold miners. More than 22m Barrick shares changed hands as the share tumbled 5% to the lowest since 1990.
The sell-off was led by Barrick Gold Corp (NYSE:ABX, TSE:ABX), the world’s top producer of the metal, which tumbled 5% to the lowest in USD terms since 1990. More than 22m shares changed hands, double the usual daily volume for the share.
Barrick’s market value is down 32% over the last three months and is now worth $13.8 billion in New York. That compares to a $64 billion capitalization when gold was at $1,900 in 2011. Barrick’s gold production is expected to fall to between 6.2m – 6.5m ounces as it disposes of underperforming assets to tackle its crippling debt-load of more than $13 billion.
The world’s most valuable gold stock, Goldcorp (TSE:G, NYSE:GG) fell 6% in heavy volumes of more than 10m shares traded and is now worth $13 billion in New York and C$16.4 billion in Toronto – a decade low. Year to date share price decline for the Vancouver-based firm is a relatively modest 10% in Canadian dollar terms thanks to the falling loonie which hit six year lows this week.
Goldcorp is forecasting a whopping 20% production increase this year to between 3.3m – 3.6m ounces despite cutting capex costs nearly in half to $1.3 billion. Goldcorp latest project to come on stream is the Argentina-based Cerro Negro gold and silver mine while its also ramping up at Éléonore in Quebec.
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