The price of the precious metal jumped back over $US1300 an ounce this week after sinking below $1200/oz late last month.

Macquarie Private Wealth said gold had possibly found its floor, but gold miners were still struggling to adapt to the changed conditions.

“Most producers have responded to the funding issues presented by the current environment through a combination of accessing available credit lines, rolling their debt maturities, and cancelling/delaying low return projects or marginal expansions,” Macquarie said.

“That said, if the current gold price environment prevails (a scenario we see as highly likely) we believe that the preservation of balance sheets will continue to be a focus for investors.”

Macquarie downgraded Alacer Gold to neutral from outperform, earmarking it as one of the companies most likely to require additional debt over the next year.

That opinion is at odds with Morgan Stanley, which says Alacer’s $254 million cash balance should adequately fund its staged expansion of the Copler mine in Turkey.

Out of a report covering seven Australian gold miners, Alacer was the only company to receive a low rating from Morgan Stanley on cash and funding issues.

Macquarie also downgraded Silver Lake Resources to neutral from outperform for the same reason, but said the delay of the Caustons underground mine at Murchison was a positive.

“While we see the deferral of capital in the short term as a positive, as it negates the requirement for any debt drawdowns, we do note that to justify the investment in the Murchison the capital is required in the coming years,” Macquarie said.

Hartleys also cut Silver Lake to neutral from speculative buy late last week.

Macquarie also downgraded Evolution Mining to neutral from outperform, though both Macquarie and Morgan Stanley said while its operations were higher cost, the company recently passed the peak of its capital expenditure with the completion of Mt Carlton.

Morgan Stanley believed there was a “significant overhang” in the carrying value of Evolution’s assets and said a $A300 million writedown would lead to a 5-10% uplift in gearing.

Macquarie cut producers Perseus Mining and Kingsgate Consolidated and developer Gryphon Minerals to underperform from neutral.

Morgan Stanley noted the risk of cashflow and funding issues for Africa-focused Perseus and Gryphon was high.

Perseus recently put its Sissingue project on ice until at least next year, while Gryphon has slightly delayed first production from its Banfora project.

Morgan Stanley also put high funding risks on Medusa Mining and Resolute Mining, warning that growth projects for both may stretch finances.

Macquarie also cut St Barbara to neutral from outperform, though it said cashflow from the Australian operations should be sufficient to repay debt.

Regis Resources and Beadell Resources remained the top picks for Macquarie with outperform ratings and were the only two of its list of producers not to be downgraded, though Regis’ price target was lowered by 40c to $3.60.

Morgan Stanley said that with a medium risk of funding issues, Regis could choose to defer the Rosemont stage two development if low prices persisted.

Papillon Resources and Chesser Resources remain the key picks for Macquarie among the developers and outperform ratings were maintained.

Papillon was also the key developer pick for Foster Stockbroking, while the company favoured Northern Star Resources, Millennium Minerals and Beadell among the producers.

Macquarie warned that the gold sector was likely to underperform in the short-to-medium term.

“That said, for those investors with a longer time horizon or those willing to trade the volatility in between, we believe that the opportunity to derive significant returns from the space will present itself, namely in the chance to buy quality names at cyclical lows,” it said.