Gold Stocks Lose More Luster as Investors Fear Rate Hike

Joe Goldman |

GoldGold stocks were slammed on Tuesday after the Bank of Japan provided no additional stimulus and investors continued to fear a rise in short-term rates. Although the price of gold only dropped $9 per ounce to $1377, gold was the stock market’s worst performing industry on Tuesday, with the average stock dropping 6.09 percent.

Stock market selloffs around the world also prompted gold to trade lower. Gold hit an intraday low of $1365, its lowest level in almost three months.

Gold may also still be hungover from Standard & Poor’s U.S. credit rating upgrade. On Monday, S&P revised United States credit from “negative” to “stable.” Gold spiked in August 2011 when S&P downgraded U.S. credit, so it makes logical sense that gold would turn negative with a credit upgrade.

Investors in gold stocks suffered the worst losses on Tuesday. Goldcorp (GG) fell 3.04 percent to $27.77, Barrick Gold (ABX) slipped 3.68 percent to $19.65, Eldorado Gold Corp (EGO) dropped 5.51 percent to $7.38, and Kinross Gold Corporation (KGC) plunged 6.01 percent to $5.94.

From a trading standpoint, gold bottomed on April 16 at $1323. A breakdown below that level would likely confirm lower prices and would worsen gold stocks’ yearlong pullback.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ABX Barrick Gold Corporation 18.11 -0.42 -2.27 10,712,410
EGO Eldorado Gold Corporation 4.13 -0.12 -2.82 5,855,491
GG Goldcorp Inc. 16.66 -0.43 -2.52 5,532,511
HRG HRG Group Inc. 15.49 -0.03 -0.19 569,014
KGC Kinross Gold Corporation 4.30 -0.13 -2.93 13,643,667

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