Gold futures tumbled by more than $110 on Monday so far, deepening their descent after officially entering bear-market last week. Prices for industrials metals such as silver and copper also slumped, following economic data from China that fell short of expectations.
Silver for May delivery declined 11.89% and trades at around $23.18 an ounce, while its previous close was $26.33 an ounce last Friday. Lat week, the white metal lost 3.3%.
Gold now trades at $1.392.10 an ounce, down approximately 7% on the day at 2.18 pm Dubai time, while the previous close was $1,501.40. The losses nearly double the yellow metal’s drop last Friday, when it declined by $63.50, or 4.1%, to settle at $1,501.40 an ounce on the Comex division of the New York Mercantile Exchange. Friday’s closing price marked a 20.5% drop for the most-active contract from the record settlement of $1,888.70 an ounce reached on Aug. 22, 2011. Therefore, most market analysts commented that gold officially entered bear market, after 12 years of upside performance.
- Read more here: Gold under considerable pressure
Traders and analysts have cited numerous reasons for gold’s breakdown.
Investors’ sentiment has suffered due to recent cuts to price forecasts for the precious metal and outflows from gold exchange-traded products. Among those calls, Goldman Sachs, last week lowered its average gold-price forecast for 2013 to $1,545 an ounce, a level it took out last Friday.
Gold’s slump has also been blamed on potential central-bank sales to shore up fiscal shortfalls. This is suggested after ECB President Mario Draghi put pressure on Cyprus to sell its excess gold reserves to help fund the bailout and plug a €6 billion gap. Although Cyprus is yet to announce decision how it will fund the gap, these comments have rattled investors and caused the selloff.
Elsewhere, copper prices lost 7 cents, or 2%, to $3.28 a pound. Copper’s gain of 0.2% last week was wiped out after China, the world’s second-largest economy, posted quarterly-growth and monthly industrial-production figures that missed analyst expectations.
China’s gross domestic product in the January-March quarter rose 7.7%, slower than growth of 7.9% in the fourth quarter, and below expectations for an 8% gain in separate surveys from Dow Jones Newswires and Reuters.
Among the other Chinese data, March industrial production increased 8.9% from the year-earlier period, missing the Dow Jones Newswires forecast for a 10% gain. The growth was the weakest in more than a year, slowing from a 9.9% average rise for the January-February period.
Oil prices were also tumbling on Monday as the weak China data deepened worries about demand for the commodity.
