GOLD ETFS & GLD NEWS – Gold ETFs dropped Thursday as the SPDR Gold Trust (GLD) plunged $3.51, or 2.0%, to $171.07 per share. The sell-off in gold ETFs and the GLD stemmed from a substantial reversal in gold futures following the CME Group’s decision to increase margin requirements on the COMEX. The yellow metal, of which the GLD is a proxy, tumbled from a new all-time record high of $1,817.60 per ounce to $1,765.10 as of 12:00pm ET.
Weakness in the GLD, the largest of the gold ETFs, put considerable pressure on gold equities. The AMEX Gold Bugs Index (HUI), a composite of the world’s largest gold companies, fell 1.7% to 557.25. Notable decliners included Agnico-Eagle Mines (AEM), Barrick Gold (ABX), and Eldorado Gold (EGO) – which retreated 1.0%, 1.7%, and 3.1%, respectively.
While gold ETFs and the GLD moved lower, several gold companies were in the news Thursday. Kinross Gold (KGC) reported second quarter earnings of $0.20 per share, beating analysts’ estimates of $0.17. The Canadian-based gold miner also raised its semi-annual dividend by 20%.’
However, shares of KGC tumbled 4.7% to $15.49 per share. TD Securities analyst Greg Barnes attributed the weakness in Kinross Gold to the Company’s deferral of the completion of the feasibility study of its Tasiast gold deposit in Mauritania, and to a potential $500 million to $1 billion increase in Tasiast’s $2.7 billion capital cost budget.
IAMGOLD (IAG) also came under heavy selling pressure, falling 6.5% to $18.82 per share, after announcing disappointing earnings results. The Company reported operating earnings per share of $0.19, well below the $0.29 consensus estimate among analysts. Making matters worse, IAMGOLD reduced its 2011 full-year production guidance to 940,000-1,000,000 ounces from 950,000-1,050,000 and raised its cash cost guidance to $620-$650 per ounce from $590-$620.
Gold Fields (GFI) bucked the trend of lower gold shares, rising 0.8% to $16.46 per share after reporting encouraging earnings results. The South African-based gold miner announced adjusted earnings per share of $0.27, beating the $0.26 consensus estimate among analysts. Gold Fields also maintained its 2011 production guidance of 3.5-2.7 million gold equivalent ounces.
Today’s negative reversal in gold ETFs and the GLD has led to a chorus of calls predicting further weakness in the gold market. While moving substantially lowing after reaching a new all-time high is a worrisome sign for the GLD from a technical perspective, one day does not make a trend. For the intermediate-term outlook to change, gold ETFs such as the GLD would have to experience further selling pressure in the coming days.