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Horror story for gold investors continues Friday

Horror story for gold investors continues FridayGold suffered a second day of selling on Friday, shedding more than $10 an ounce to a 2-week low.

The precious metal was hurt this week by a new more hawkish tone from the US Federal Reserve, weakening demand from Asia, continued outflows from gold-backed exchange traded funds and a spillover in negative sentiment from plunging gold mining stocks.

In early afternoon trade on the Comex market in New York December gold futures changed hands at $1,312.60 down $11.10 or 0.8% from yesterday’s close, up from lows for the day of $1,305.60.

Gold was poised to shed more than 3% in value this week after a 2% dip on Thursday and is down 20% this year.

On Wednesday, the US central bank left the door open to start throttling back the quantitative easing program that is set to top $4 trillion by the end of the year when it next meets in December, boosting the dollar and sending gold in the opposite direction.

Also impacting negatively on sentiment in the gold market was a second day of heavy selling of gold miners wiping billions in market value off the sector.

Top producer Barrick Gold (NYSE:ABX) set to mine more than 7 million ounces this year,  lost another 7.5% on Friday after a 5.4% decline yesterday following the announcement of an unprecedented $3 billion stock sale at a deep discount.

The stock has shed more than $2 billion in value the last two days and is down 48% so far in 2013. At just under $18 billion market value the company is now valued more than $30 billion below what is was just over two years ago.

While some of the pain for Barrick was self-inflicted, other gold counters also sold off again on Friday.

The world’s most valuable gold company Goldcorp (TSE:G) and world number two producer Newmont Mining both fell more than 4% in value.  Vancouver-based Goldcorp is down a third in value this year, while Denver headquartered Newmont is 44% cheaper than at the start of the year.

Continued outflows from the gold-backed ETF market was more evidence of negative momentum building up in the gold market.

Holdings in the world’s largest gold ETF, SPDR Gold Shares (NYSE: GLD) are at their lowest level since February 2009.

In 2003 GLD saw outflows of 504 tonnes to 866 tonnes, down more than 35% from the record high of 1,351.24 tonnes hit early December last year. Net sales of GLD so far in October was 40 tonnes, the worst performance since July.

Silver for December delivery was also weaker on Friday, down slightly to $21.85, after falling more than 3%.

The biggest silver ETF, the iShares Silver Trust, also recorded a monthly outflow of 127.4 tonnes in October, its first since June.