Newcrest Leads Gold Stocks Lower as Metal Falls to 2-Year Low

Newcrest Mining Ltd. (NCM) and Zijin Mining Group Co. led declines among gold producers amid concern a decline in the precious metal to its lowest level since April 2011 is weakening the earnings outlook for producers.

Newcrest, Australia’s largest gold producer, declined 8.1 percent to A$17.955 at 12:40 p.m. in Sydney, bringing this year’s drop to 19 percent and heading for its lowest close since October 2008. Zijin Mining Group Co., China’s biggest gold miner by market value, sank 7.2 percent to HK$2.33 in Hong Kong, extending its 2013 retreat to 24 percent. Newcrest was the sixth-biggest drag on the MSCI Asia Pacific Index (MXAP), the regional equities benchmark gauge that fell 0.8 percent.

Gold for immediate delivery dropped as much as 3.9 percent $1,425.75 an ounce and was at $1,433.15 at 10:09 a.m. in Singapore. The price of the precious metal slumped 5 percent on April 12, taking losses to more than 20 percent since a record close in 2011, and meeting the common definition of a bear market.

“The investment community has barely begun to liquidate their holdings,” of gold-related assets, said Stewart Richardson, who helps oversee $100 million as partner and chief investment officer at RMG Wealth Management LLP in London. “We will be standing on the sidelines to see how this shakeout progresses.”

The turn in the gold cycle is quickening and investors should sell the metal, Goldman Sachs Group Inc. analysts said in an April 10 recommendation.

Bullion has plunged 11 percent in 2013, after rising for 12 straight years, as data showed the global economy is improving, prompting investors to sell holdings in exchange-traded products at a record pace.

Other gold producers retreated. Jiangxi Copper Co. fell 4.4 percent to HK$15.74. Kingsgate Consolidated Ltd. (KCN) lost 16 percent to A$2.94, Northern Star Resources Ltd. (NST) plunged 15 percent to 75.5 Australian cents and Alacer Gold Corp. tumbled 14 percent to A$2.99.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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