Gold producers including Barrick Gold Corp. fell the most in four years as the metal slumped below $1,400 an ounce to a two-year low after dropping into a bear market last week.
The 54-company Standard & Poor’s/TSX Global Gold Sector Index plunged as much as 8.4 percent, the biggest intraday decline since March 10, 2009. Barrick, the biggest producer by sales, fell 9.1 percent to C$20.85 at 10:19 a.m. in Toronto, where the company is based, while Goldcorp Inc., the second-largest Canadian gold miner, dropped 5.4 percent to C$28.45. Newmont Mining Corp., the biggest U.S. producer, fell 6.4 percent to $34.03 in New York.
Gold futures in New York fell 7.2 percent to $1,393.20 an ounce at 10:22 a.m. as optimism that a U.S. recovery will curb the need for stimulus cut demand for a protection of wealth. Gold earlier fell as much as 7.8 percent to $1,385 an ounce.
Gold futures fell 4.1 percent on April 12, taking losses to more than 20 percent since the record close in August 2011 and meeting the common definition of a bear market.
Gabriel Resources Ltd., which is seeking to develop a gold mine in Romania, fell as much as 23 percent after John Hayes, a Toronto-based analyst at BMO Capital Markets, cut his rating on the shares to underperform, the equivalent of sell. Detour Gold Corp., the operator of the Detour Lake mine in Ontario, fell as much as 18 percent.
There’s “a moderate probability that Barrick could trigger a single-notch credit-rating downgrade” if gold prices stayed at $1,400 from the second quarter of this year through 2015, Stephen Walker, Dan Rollins and Sam Crittenden, analysts at RBC Capital Markets, said in a note.
“We would expect the company to draw down its existing credit facilities, consider cash saving measures and seek new debt financing in order to complete the existing capital spending programs,” at $1,400 an ounce gold, the RBC analysts said.
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