Gold miners including Barrick Gold Corp. (ABX), the largest by sales, fell to a four-year low after the U.S. Federal Reserve said it may phase out stimulus and the metal dropped below $1,300 an ounce for the first time since 2010.
The 53-company Standard & Poor’s/TSX Global Gold Sector Index dropped 7.3 percent to 166.98 points at the close in Toronto. The index has declined 45 percent this year. Toronto-based Barrick fell 6.9 percent to C$17.27, the lowest since August 1992, while Goldcorp Inc. (G), the second-largest Canadian producer by sales, fell 7.9 percent to C$24.81.
Gold futures for August delivery plunged 6.4 percent to settle at $1,286.20 at 1:42 p.m. on the Comex in New York. In electronic trading after the market settled, prices touched $1,275.40, the lowest since September 2010.
Federal Reserve Chairman Ben S. Bernanke said yesterday stimulus may be reduced. The metal’s decline was the biggest since April 15, when gold ended the day down 9.3 percent, the most in three decades. The central bank, which buys $85 billion of Treasury and mortgage debt each month, may begin reducing purchases this year and end the program in 2014 should the economy continue to improve, Bernanke said.
“The gold producers have just been devastated.” Michael O’Brien, who helps manage C$204 billion at TD Asset Management Inc., said by phone from Toronto today. “You’ll have a heck of a time having anybody build a new mine or get financing in this environment.”
Perseus Mining Ltd. (PRU), an Australian gold producer with operations in Africa, declined 25 percent in Toronto, to 57 Canadian cents a share, while OceanaGold Corp. (OGC), which mines in New Zealand and the Philippines, dropped 12 percent to C$1.26.
Holdings in the SPDR Gold Trust, the world’s largest exchange-traded product backed by bullion, fell yesterday below 1,000 metric tons for the first time in four years.
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