Gold 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.