NEW YORK (AP) -- Shares of gold miners fell Tuesday as the price of the precious metal declined, and a Jefferies analyst maintained a pessimistic view of the sector while downgrading several stocks.
The price of gold fell $12.30, or 1 percent, to $1,243.40 per ounce. It has declined as the dollar and other investments have strengthened.
Jefferies & Co. analyst Peter Ward downgraded shares of Barrick Gold Corp., Goldcorp Inc., Kinross Gold Corp., and Newmont Mining Corp. He now rates Barrick shares "Hold" and the other three stocks at "Underperform."
Ward said gold mining stocks are still expensive even though they have been slumping. In his view, their prices are high because the companies generate little or no free cash, and their free cash flow could become negative over the next few years. Even so, prices will need to fall further before the companies cut back mining activity.
Ward noted that the price of gold has fallen by more than a third from its record levels in 2011. He lowered his gold price forecast to $1,250 an ounce from $1,500 on Tuesday, and said the price could fall further than that level.
"In our opinion, an asset that declines by 37 percent in value doesn't qualify as a "safe haven" or "store of value," he wrote. "And, it never should have. Gold is a commodity whose price can rise or fall."
In afternoon trading Barrick Gold shares lost 75 cents, or 5 percent, to $14.50 and Goldcorp shares fell $1.42, or 5.6 percent, to $24.05. Kinross shares gave up 22 cents, or 4.2 percent, to $4.88, and Newmont shares lost $1.05, or 3.5 percent, to $29.11.
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