Precious Metals Shares Slide, IAMGOLD Falls Despite Upgrade

Gold and silver shares finished in the red on Tuesday as precious metals gave back most of yesterday’s gains.

The Philadelphia Gold & Silver Index (XAU) – made up of the precious metal sector’s largest companies – closed down by 1.3% at 155.56.  The XAU had been lower by as much as 2.4% at 153.74 this morning, but pared its losses as trading progressed.

Among gold producers, one notable decliner was IAMGOLD (IMG.TSX, NYSE: IAG), which fell 2.2% to C$11.86 per share.  IAMGOLD retreated alongside the gold sector despite positive commentary this morning from National Bank Financial, which upgraded the Canadian-based gold miner to Outperform from Sector Perform.  However, the firm lowered its price target on IMG.TSX to C$16.75 from C$17.50.

In National Bank Financial’s report, analyst Paolo Lostritto wrote that “The upgrade is based on share price depreciation, a strong balance sheet, dividend yield support and positive exposure to falling oil prices.”  He attributed the price target reduction to “increased capex assumptions at Côté Lake and other model refinements” from IAMGOLD’s recent analyst day.

Other gold stocks settling lower included Agnico-Eagle Mines (AEM) and Barrick Gold (ABX) – which dropped by 3.7% to $40.48 and by 3.5% to $36.92 per share, respectively.

Coeur d’Alene Mines (CDE) and Hecla Mining (HL) – two widely-traded silver stocks – slid by 1.5% to $17.10 and by 3.7% to $4.47 per share.