Gold prices are nearing a sixth-straight weekly decline due to the expected Federal Reserve rate hike in December and a stronger U.S. dollar, Reuters reports.
The precious metal struggles to compete with interest-bearing assets when interest rates are raised and is more expensive to foreign investors when the U.S. dollar strengthens, according to Reuters.
"The dollar is bid and you have the inverse relationship with gold simply because the Fed is going to be tightening," Societe Generale analyst Robin Bhar told Reuters. "The omens are not positive for gold in the lead-up to the December rate meeting."
Gold for December delivery is declining 1.21% to $1,057 per ounce on the COMEX this afternoon.
Based in Toronto, Barrick Gold is a mining company focused on the production and sale of gold and copper.
Separately, TheStreet Ratings team rates BARRICK GOLD CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate BARRICK GOLD CORP (ABX) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 311.2% when compared to the same quarter one year ago, falling from $125.00 million to -$264.00 million.
- The debt-to-equity ratio of 1.26 is relatively high when compared with the industry average, suggesting a need for better debt level management.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market, BARRICK GOLD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.49%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 309.09% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Despite the weak revenue results, ABX has significantly outperformed against the industry average of 45.4%. Since the same quarter one year prior, revenues fell by 11.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: ABX
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.