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Business

Gold miners under pressure over plummeting metal prices

Several gold mining companies have expressed their concerns over continuously falling prices on the bullion market. And following painful quarterly losses, some laid on cost-cutting programs to ease the impact.

As the price of gold continued its downward spiral, a number of mining companies admitted Wednesday they were forced to look into cost-cutting schemes to regain profitability.

The world's third-largest producer of the precious metal, AngloGold Ashanti, conceded it ended the second quarter in negative territory. The South African miner announced costs had to be reduced significantly. It also announced Wednesday it would not pay out quarterly dividends.

AngloGold Ashanti said long-term prospects didn't look that bad at all, but insisted the firm had to ready itself for a rollercoaster ride in the medium term with all the current market uncertainties at hand.

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Its competitor, Randgold, suffered disappointing revenues and a 62-percent drop in earnings. It said it would also have to reduce costs of operations in its mines predominantly in Africa, but added it would mine more gold, rather than less, in the months ahead.

Gold prices have fallen significantly since the US Federal reserve hinted it might ease up on its bond-buying program, which aimed to prop up the economy but also included the risk of fueling inflation. Inflation worries had formerly boosted gold, because the metal was seen as a safe haven for investors. But now, with the threat of inflation less imminent, gold has lost much of its appeal.

Plummeting metal prices have not affected all gold miners, though. Russia's Highland Gold, for instance, claimed recent developments would not keep it from exploiting new deposits.

hg/tm (AP, Reuters)

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