The S&P Gold and Precious Metals Index has fallen 11% so far this year (through Feb. 9), after declining 15.9% in 2000. That's weaker than the broader market: the S&P 500 index has slipped 0.4% year-to-date, after declining 10.1% last year.
We see renewed South African producer sales and a likely drop in physical demand exerting pressure on gold prices. The long-term fundamentals are intact as the CRB Commodity Index, PPI and CPI are still rising, and global output drops on lower ore grades and lower exploration spending. But with near-term prospects weaker, we are turning neutral on the
We downgraded Barrick Gold (~~), Homestake Mining (~~), and Newmont Mining (~~) from accumulate to hold. We also cut Placer Dome (~~) from accumulate to avoid. Larkin is an equity analyst at Standard & Poor's