Gold Producers Fall Most in Two Months as Haven Demand Ebbs

Where Are Gold Prices Heading?
  • Goldman sees bullion prices dropping to $1,000 in 12 months
  • BI Global Gold Mining Competitive Peer Group Declines

Shares of gold producers fell the most in two months, and Barrick Gold Corp. and Newmont Mining Corp. declined for the first time in four days, as investors backed away from precious metals amid lower demand for haven assets. Spot gold swung between gains and losses, after dropping the most since July on Monday.

QuickTake The Rise and Fall of Gold

China’s equity markets rallied the most in three months following data that showed the nation’s banks doled out a record amount of loans in January, curbing demand for gold as a haven. Goldman Sachs Group Inc. said the metal’s surge to a one-year high last week wasn’t justified. Bullion for immediate delivery slumped 2.3 percent on Monday.

Gold has climbed 13 percent this year, lifting shares of producers, as concerns of a deepening economic slowdown in China roiled financial markets and speculation mounted that the Federal Reserve will be slow to raise U.S. interest rates further. China is now stepping up support for the economy by ramping up spending and considering new measures to boost bank lending.

“The big run up in gold started with China having issues, and now China comes back from vacation and the first step is on the upside and everyone thinks things aren’t that bad,” Miguel Perez-Santalla, sales and marketing manager at Heraeus Metals in New York, said in a telephone interview. “The more comfort there is, the lower gold will go and the worse it is for gold miners.”

The BI Global Gold Mining Competitive Peer Group, which tracks 45 companies, fell 2.7 percent at 2:35 p.m. in New York. The measure fell as much as 3.2 percent, the biggest intraday loss since Dec. 17. Eldorado Gold Corp. and Goldcorp Inc. lost at least 6 percent in Toronto trading.

Bullion for immediate delivery fell 0.4 percent to $1,204.25 an ounce, according to Bloomberg generic pricing. It touched $1,263.48 on Feb. 11, the highest in a year.

Prices will slump back to $1,100 in three months and $1,000 in 12 months, Goldman analysts including Jeffrey Currie and Max Layton wrote in a report received on Tuesday, reiterating targets in a note last week. It’s “time to sell the fear barometer,” they said.

  • Gold futures for April delivery slid 2.5 percent to close at $1,208.20 an ounce on the Comex in New York.
  • Silver futures for March delivery dropped 2.9 percent to $15.334 an ounce.
  • On the New York Mercantile Exchange, platinum and palladium fell.
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