South Africa Gold Stocks Fall to 13-Year Low on Bullion Drop

Gold stocks in South Africa, the world’s sixth-biggest producer of the metal, fell to a 13-year low as bullion dropped to the lowest since 2010 as signs of an improving U.S. economy curbed haven demand.

The five-member FTSE/JSE Africa Gold-Mining Index retreated 4.2 percent to 957.73 by the close in Johannesburg, the lowest since April 2001. Sibanye Gold Ltd., the country’s biggest producer, fell 6.5 percent to 21 rand while AngloGold Ashanti Ltd., the world’s third-largest miner of the metal, declined to an almost 14-year-low.

Gold slumped to the lowest in four years as the dollar strengthened after the Bank of Japan unexpectedly boosted stimulus and the Federal Reserve ended asset purchases this week. Bullion fell 2.8 percent to $1,165.07 an ounce, the lowest since July 28, 2010, at 3:56 p.m. in London.

“The factors that held gold for so long are no longer valid,” Peter Major, a mining analyst at Cadiz Specialised Asset Management in Cape Town, said today by phone. With U.S. growth accelerating and the dollar strengthening, “it’s like pulling the legs from underneath a table” for gold, he said.

U.S. GDP grew at a 3.5 percent annualized rate in the three months ended September after a 4.6 percent gain in the second quarter, Commerce Department figures showed yesterday in Washington. It marked the strongest back-to-back readings since the last six months of 2003. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, reached 1,082.92 today, the strongest level since at least January 2005.

Sibanye Gold had the biggest decline among members of the index, while AngloGold retreated 2.6 percent to 93.50 rand, the lowest since December 2000.

Before it's here, it's on the Bloomberg Terminal.