TLDR
- Barrick Mining (ABX) fell ~4.77% to $40.76 on Wednesday
- An Ontario Superior Court ruled a securities misrepresentation class-action lawsuit against the company can proceed
- Gold prices dropped 1.7% to $4,917/oz, falling below the $5,000 mark for the first time since late February
- Spot silver also fell 3% to $76.90 as the U.S. dollar rallied 2% this month
- The Federal Reserve’s rate decision, due Wednesday afternoon, is adding pressure on precious metal stocks
Barrick Mining (ABX) is having a rough Wednesday. The gold miner’s stock dropped nearly 5% as a one-two punch of legal trouble and falling gold prices hit at the same time.
An Ontario Superior Court ruled that a securities misrepresentation class-action lawsuit against Barrick can move forward. The decision rattled investors who now face the prospect of extended legal uncertainty and potential costs down the road.
The legal news landed on an already weak day for gold. Prices fell 1.7% to $4,917 per ounce, slipping below the $5,000 mark for the first time since the Middle East conflict escalated in late February.
Spot silver wasn’t spared either, dropping 3% to $76.90 on the day.
The drop in precious metals is being driven largely by a strengthening U.S. dollar. The dollar index is up 2% this month and has climbed around 5% from January’s four-year low.
HSBC analysts say the dollar is likely to stay dominant if oil prices remain elevated and market volatility continues.
When the dollar rises, commodities priced in it become more expensive for foreign buyers — which typically pushes demand, and prices, lower.
Fed Rate Decision Adds Pressure
The Federal Reserve is set to announce its policy decision Wednesday afternoon. Markets aren’t expecting a rate change, but traders are watching closely for Fed Chair Jerome Powell’s tone on inflation.
Goldman Sachs economist David Mericle flagged the Iran conflict and oil price spike as the most pressing issues facing policymakers since the last meeting.
Economist Mohamed El-Erian has raised his recession odds to 35%, pointing to higher rates, slower growth, and rising unemployment as converging pressures.
Goldman Sachs also warned that markets may be underestimating the economic fallout from the Middle East conflict.
Since the Iran conflict began, the dollar has overtaken gold, the yen, and the Swiss franc as the market’s preferred safe haven. That’s a problem for gold miners who depend on firm bullion prices.
Class-Action Lawsuit Clears Key Hurdle
The Ontario Superior Court decision is a fresh blow for Barrick specifically. Allowing the class-action to proceed means the company now faces a prolonged legal process with costs and outcomes still unknown.
Institutional investors reacted by selling, which reinforced the technical breakdown already forming in the stock.
With little near-term catalyst in sight to reverse sentiment, analysts see pressure on ABX continuing in the short term.
At the time of publication, Barrick Mining (ABX) was trading down 4.77% at $40.76, according to Benzinga Pro.
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