South African Gold Stocks Drop After Fed Signals QE TaperKevin Crowley
South African gold miners including Sibanye Gold Ltd. and Gold Fields Ltd. dropped for a fourth day in Johannesburg trading after U.S. Federal Reserve officials signaled they may taper $85 billion in monthly bond buying.
The FTSE/JSE Africa Gold Mining Index dropped 4.6 percent to 1,179.62 points at 4:10 p.m. in the city, the biggest drop since August. Sibanye led the decline and was 6.3 percent lower.
“There’s a general nervousness that it’s back to taper talk again,” said Maurice Mason, a London-based analyst at Peel Hunt LLP. “That’s bad for gold and a lot of companies are pretty marginal at these current levels.”
Fed officals yesterday signaled they may taper bond buying “in the coming months” if the economy improves as anticipated, according to the record of the Federal Open Market Committee’s Oct. 29-Oct. 30 gathering, released yesterday in Washington. Bond buying by central banks, called quantitative easing, typically boosts the price of gold, a safe-haven asset.
Gold dropped 2.5 percent yesterday to $1,244 an ounce and traded 0.1 percent lower at $1,242 an ounce at 4:21 p.m. in Johannesburg.
“The market seems to be looking for any excuse to sell out of gold equities,” said Richard Hart, a Johannesburg-based analyst at Macquarie First South Securities Ltd. “There seems to be a strong sell-off at any talk of tapering.”
South African producers are cutting their electricity usage after utility Eskom Holdings SOC Ltd. implemented emergency measures to save power Nov. 19, the Chamber of Mines said.
Gold Fields dropped 4.8 percent to 41.90 rand, the lowest intraday price since Nov. 30, 2001. AngloGold Ashanti Ltd. fell 4.7 percent to 138.85 rand.
Spokesmen for Sibanye, Gold Fields and AngloGold declined to comment.