Barrick Gold (ABX) Slides 12%: Here's What Happened
Shares of Canada based Barrick Gold Corporation (ABX) fell on Tuesday with the rest of the market. The stock was down 11%, falling nearly $2 per share.
Barrick goes where gold goesFounded in 1983, Barrick Gold mines and explores for gold, copper and nickel.
The company operates mining projects in Canada, the US, the Dominican Republic, Australia, Papua New Guinea, Peru, Chile, Argentina, Zambia, Saudi Arabia and Tanzania.
Despite the global diversity, a bit more than 75% of the company's gold production comes from the Americas region.
Barrick Gold's price slide was in reaction to a sell-off in gold, which is seen as dimming the gold mining company’s short-term prospects.
Gold for December delivery fell below $1,300 per ounce on Tuesday, falling $43 per ounce, or 3.3%, to settle on the COMEX at $1,270 per ounce.
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That drop represents the largest one day price decline since 2013. It is also the lowest gold price since June 23, when the UK cast the Brexit vote, voting to exit the European Union. It represents a reversal of the upward trend in the gold price during much of the summer.
Much of the reason for the selloff in gold is attributed to the prospect of an increase in US interest rates later this year.
Data is accumulating that may support a rate increase by the Federal Reserve. The dollar rose on Monday's report of higher-than-expected U.S. manufacturing activity, on the expectation that the report increases the likelihood of a rate hike. The ISM Manufacturing Index, which measures production activity, came in at 51.5 for September, well above analysts' estimates of 50.2.
A stronger dollar means that gold is more expensive for foreign buyers. "The market is coming to terms with what may be a new burst of dollar strength and a U.S. economy that is strong enough to bear an interest-rate increase," said Ira Epstein, a strategist at the Linn Group. "This is where you step away from gold."
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Published on Oct 5, 2016By Kevin Mercadante