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Gold stocks slaughtered, Barrick drops 10%

The gold price slid more than $24 or 2% an ounce on Thursday to a week low of $1,323 after the US Federal Reserve signalled it may cut back its stimulus program sooner than thought and Chinese demand for the metal waned.

After a fightback from near three year lows below $1,200 struck at the end of June, gold’s momentum now seems to have turned negative again with gold stocks sold off heavily on a relatively modest fall in the price of the metal.

By the close on Thursday Barrick Gold Corp (NYSE:ABX, TSE:ABX) had lost 5.9%, after announcing results that were in line with expectations and the suspension of its troubled Pascua Lama project on the border between Chile and Argentina.

The world’s number one miner of the precious metal followed up after hours with more damaging news. The Toronto-based miner announced it is raising $3 billion by issuing 163.5 million common shares at $18.35 per share.

Investors duly marked down the stock again with the counter shedding an additional 5.7% to $18.31 in after hours trade in New York, wiping more than $2 billion off the value of the company on the day.

Barrick is now worth $19.4 billion, down 44% so far this year and nowhere near its $54 billion market value a mere two years ago.

Newmont Mining Corp (NYSE:NEM) with a market value of $13.5 billion escaped the worst of it, down 2.8% in regular trading and trading slightly to the upside after hours after announcing profits up 11% despite a fall in revenue.

Attributable gold production rose 4% to 1.28 million ounces, while attributable copper output decreased 3% to 34 million pounds during the third quarter at the Denver-based company.

The world’s third largest gold producer behind Newmont, AngloGold Ashanti (NYSE:AU) was one of Thursday’s worst performers. The Johannesburg-based company’s ADRs listed in New York slid 6.7% on Thursday and the value of the company has now halved this year.

Fellow South African miner Gold Fields (NYSE:GFI) the worst performer among the gold majors this year, gave up 4.4% in New York. The world’s fourth largest gold producer has had its value slashed 63% in 2013 with investors punishing it for its contrarian purchase of high-cost mines amid the slump.

Goldcorp (TSX:G), expected to produce around 2.5 million ounces of gold this year, declined 3.9%. The Vancouver-based company retained the top spot as the most valuable gold stock with a Toronto big board market capitalization of $21.6 billion.

Toronto’s Kinross Gold (TSX:K) managed to hold above $6 billion value despite losing 5.3% on the day. Investors in the company are nursing a $5 billion loss in market cap this year after Kinross, like all the majors, took multi-billion charges against the value of its operations.

Canada’s second tier gold miners also suffered a loss of confidence from gold investors, giving up much of the gains of recent weeks.

Yamana Gold (TSX:YRI) skid 3.4%, Agnico Eagle Mines (TSX:AEM) losses were fairly modest at 2.5% while Eldorado Gold Corp (TSX:ELD) declined 5.1% and Iamgold (TSE:IMG) dropped 5.3%.