AngloGold Ashanti (AU +1.5%) CEO Srinivasan Venkatakrishnan said he would press ahead with a plan to cut operating costs by $500M by year's end through mine closures and layoffs even if it took an immediate toll on earnings.
AU isn't currently looking for merger or acquisition opportunities, the CEO said after reporting a narrower Q2 net loss, calling the consolidation drive in the sector a potential source of "distraction... Our focus isn't to rush into M&A but to get the operations on a better footing."
Also, production at the two South African mines where it had suspended work after an earthquake last week is set to resume today after losing output of ~20K oz. of gold.
Precious metals miners are broadly lower as gold futures head for their biggest daily drop of 2014, plunging $29.30, or 2.2%, to $1,308.10/oz.
Physical demand has remained short of expectations, Commerzbank's Eugen Weinberg says, and India's decision to maintain a 10% import duty on gold and silver likely will dampen future gold demand expectations from the country.
Barclays, which expects gold to drop to $1,200/oz. by Q3, also expresses caution, saying recent gains across the metals complex look toppy.
Beaten-up gold miner stocks are strong across the board as precious metal prices move sharply higher and take out key technical resistance levels; Comex gold jumped $41.40 (+3.3%) to settle at $1,314.10/oz., the highest level since April 14, and silver added $0.87 (+4.4%) to end at $20.65/oz..
June gold fell to its lowest level in 15 weeks, settling 2% lower $1,265.50/oz., as "everywhere the investor looks, he sees nothing but a negative for gold today." Silver slipped 1.8% to end at $19.07/oz.
Also a factor is a round of stronger U.S. economic data showing a surprise increase in durable goods orders, improved housing data and rising consumer confidence, which is providing a lift to stocks; the expiration of June gold options also is adding to market volatility.
Precious metals miners are among the day's weakest stock performers: ABX -3.4%, GG -3.8%, NEM -3.1%, SLW -3.4%, KGC -3.8%, AUY -4.1%, AU -6.5%.
As equities open in a broad-based decline, precious metals miners show early strength: ABX +4.1%, NG +4.1%, EXK +3.7%, GG +3.7%, IAG +3.3%, SA +2.9%, AG +2.8%, SSRI +3.1%, AUY +2.7%, GOLD +2.5%, NEM +2.3%, MVG +2.3%, SLW +2.2%, PAAS +2.2%, AU +2.1%, KGC +2.2% (Briefing.com).
Gold futures settle at a four-week high, rising 1.4% to $1,246.90, as the surprisingly weak jobs report reopens debate over the pace of bond buying at the Fed; precious metals miners are far outpacing the broader market, with the top gold miner ETF (GDX) surging 3%.
The decision means Moody’s likely will take a harsher view of the prospects of the companies whose debt it rates, potentially leading to rating downgrades and higher borrowing costs for miners.
Moody's rates most of the largest gold producers including Barrick Gold (ABX -1.8%), Newmont Mining (NEM -1.6%), AngloGold (AU -2.1%), Goldcorp (GG -1.5%) and Kinross (KGC -1.1%); ABX and AU already are on a negative outlook from the agency.
Fundamentals "seem unfavorable over the next couple of years as the global economy maintains forward momentum, governments unwind various stimulus programs, and the threat of inflation remains subdued in most major economies," Moody's writes.
Randgold Resources (GOLD) +5.3% premarket after posting Q3 net profit of $81.3M, down from $103.3M in the year-ago quarter, and basic EPS of $0.88, down from $1.12 a year ago but above analysts' consensus estimate of $0.64.
GOLD produced 233,677 oz. in Q3, +14% Y/Y, while gold sales rose on the year to 348,688 oz., +9.5%; says it is on track to produce 550K oz. in Q4.
Forecasts the Kibali mine, a joint-venture with AngloGold Ashanti (AU) which began commercial production in September, will produce more than 30K oz. of gold this year and 550K oz. next year.