Gold tumbles on China data; Wall Street, oil pull lower

Yen gains as traders dump riskier investments

NEW YORK, April 15, (Agencies): Gold slumped anew on Monday, racking up its worst two-day loss in 30 years, and investors dumped stocks and other commodities after weaker-than-expected Chinese data raised concerns about the global economic outlook.

Gold dragged other metals lower as its price plunged to a more than twoyear low. Brent crude fell towards $100 a barrel, while Wall Street stocks were down more than 1 percent.

Spot gold dropped as much as 8 percent on Monday alone, falling as low as $1,355.80 an ounce. In the last two sessions gold has fallen over 12 percent, making for the worst two days since late February 1983.

Gold was recently at $1,367.70, down 7.5 percent. Strategists have cited various reasons for gold’s decline, including plans from Cyprus to sell excess gold reserves and the feared selling from other central banks. The already sharp correction has caused short-term investors to flee the asset.

“The mass liquidation in gold is feeding on itself and pushing prices of the yellow metal, possibly well below speculators’ entry points,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.

The pressure was extending across other commodities, said Wilkinson.

China’s recovery unexpectedly stumbled in the first three months of 2013, as it reported its annual growth rate eased to 7.7 percent from 7.9 percent in the final quarter of last year. Economists had forecast 8 percent growth. Industrial output in China in March also undershot expectations and added to investor sensitivity after recent disappointing economic data out of the United States.

A US regional manufacturing report on Monday showed the pace of growth slowed, the latest data to suggest the world’s biggest economy lost some steam heading into the second quarter.

Last week Cyprus revealed it would sell around 400 million euros worth of gold to help plug its finances and the move has sparked suggestions that larger countries in the region could use the move to cash in on some huge jumps gold has seen over the last decade.

Traders also cited concern that the Federal Reserve might reduce US monetary stimulus towards the end of the year.

“We are entering a phase of additional long liquidation by ETF investors and short-selling from hedge funds, which will continue in the foreseeable future,” Saxo Bank senior manager Ole Hansen said.

Brent crude futures dropped more than $2 to $100.30 as the disappointment stirred already-festering global recovery concerns. US crude also lost more than $2 to $88.77.

The FTSEurofirst 300 ended down 0.6 percent and MSCI’s world share index, which tracks stocks in 45 countries, lost 1.3 percent.

The yen rose as traders sold riskier investments funded by the cheap Japanese currency. The dollar fell 0.2 percent to 98.19 yen, having dropped as low as 97.57 yen on Reuters data in Asian trade. It has retreated from a fouryear high of 99.94 yen on Thursday, and hefty resistance is expected at 100 yen.

US

US stocks fell for a second straight session on Monday with major indexes off more than 1 percent, pressured by weaker-than-expected growth figures in China that sparked a broad selloff across markets, including oil and other commodities.

Among the S&P 500’s biggest-declining groups, the energy sector index was off 3 percent and the materials sector index was also down 3 percent.

“Liquidation is under way across equities and commodities, sparked by fears that the global economy is set to slow,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York. The Chinese data weighed heavily on oil, with US crude futures down 2.7 percent at $88.83. Chevron lost 2.4 percent to $117.12 and was one of the biggest drags on the Dow.

The SPDR Gold Shares ETF lost almost 8 percent to $133.01 as gold prices slumped to a two-year low below $1,400 per ounce. Among the most active mining stocks, FreeportMcMoRan Copper & Gold Inc fell nearly 8 percent to $29.48 while Newmont Mining dropped 5.6 percent to $34.33. Freeport’s stock was also downgraded to “sell” from “neutral” by Citigroup.

The PHLX Gold/Silver index tumbled 7.7 percent and the PHLX oil service sector index fell 3.6 percent.

The Dow Jones industrial average was down 162.71 points, or 1.09 percent, at 14,702.35. The Standard & Poor’s 500 Index was down 21.93 points, or 1.38 percent, at 1,566.92. The Nasdaq Composite Index was down 49.01 points, or 1.49 percent, at 3,245.93.

Europe

European equities fell on Monday, with the mining sector suffering its worst day in a year and a half in the face of a slump in the gold price and weak data from top metals consumer China.

Chinese industrial output and investment spending fell short of expectations, prompting analysts to cut economic growth forecasts for the world’s top metals consumer.

The data, coupled with news that the price of gold slumped to a 2-year low, plunging deeper into a technical bear market , dealt a big blow to Europe’s heavyweight mining stocks. The STOXX Europe 600 Basic Resources sector dropped 4.8 percent, its biggest 1day fall since November 2011.

The pan-European FTSEurofirst 300 index closed down 0.6 percent at 1,174.60 points.

The broader STOXX 600 also lost 0.7 percent, to 290.43 points, moving below technical support at the 50-day moving average and into the bottom half of the 283.40 to 298.90 range held since January. “I think we can hold in the same range that we’ve had since January for another month,” said Valerie Gastaldy, technical analyst at Day By Day. “It’s still more of a consolidation phase ... There are many different things happening together - miners are very, very weak, but on the other hand utilities and telecoms have been doing well.”

Utilities and healthcare were the only two sectors in the black, boosted both by their defensive characteristics and by talk of global merger and acquisitions activity in the two industries.

UK

Commodity-related stocks led Britain’s top share index lower on Monday following disappointing data from China, the world’s largest consumer of metals, and a continued sell-off of gold and silver.

The materials and energy sectors combined to take 30 points off of the bluechip FTSE 100 index after data showed China’s economic recovery unexpectedly slowed in the first quarter.

Miners Rio Tinto and BHP Billiton, which derive around a third of their revenue from China, fell 3.8 percent and each took more than 5 points off the index, with Citi also downgrading its view on the sector. FTSE 350 miners fell 5 percent — the sector’s biggest one day slide since November 2011.

The most dramatic fallers on the FTSE 100 were precious metal miners, with Fresnillo shedding 15.2 percent and peers Polymetal and Randgold Resources down 13.2 percent and 8.3 percent respectively.

Asia

Asian markets slipped on Monday after a disappointing batch of Chinese growth figures, with traders keeping a wary eye on the Korean peninsula, where military tensions are high.

Tokyo fell 1.55 percent, or 209.48 points, to 13,275.66, while Hong Kong shed 1.43 percent, or 316.38 points, to end at 21,772.67. Shanghai was down 1.13 percent, or 24.84 points, at 2,181.94.

Sydney finished 0.91 percent, or 45.6 points, lower at 4,967.9 and Seoul eased 0.20 percent, dipping 3.78 points to 1,920.45. In other markets: Taipei fell 0.74 percent, or 58.10 points, to 7,763.53.

Taiwan Semiconductor Manufacturing Co was 1.09 percent lower at Tw$99.4 while leading chip design house MediaTek shed 2.32 percent to Tw$337.5.

Manila fell 0.78 percent, or 53.66 points, to 6,837.77.

Wellington rose 0.43 percent, or 18.94 points, to 4,454.71.

Telecom added 0.41 percent to NZ$2.44, Contact Energy rose 0.17 percent to NZ$5.82 and Fletcher Building was down 1.04 percent at NZ$8.57.

Bangkok was closed for a public holiday.

Oil

Brent oil plunged $3 to just over $100 a barrel on Monday, extending a twoweek selloff that has knocked nearly 10 percent off prices as part of a wider flight by investors from commodities.

Brent crude headed down for the eighth time in 10 sessions, in what analysts said indicated that a host of weak fundamental signals were dominating sentiment. In the United States, crude oil stockpiles have ballooned to 30-year highs as domestic output surges, with no end in sight. Demand globally has struggled due to economic uncertainty in top consuming nations.

Against the background of looser fundamentals, lower-than-expected GDP growth from No. 2 oil consumer China rattled the commodity complex further on Monday, threatening to push Brent below $100 a barrel for the first time since July 2012.

Punctuating the bearish mood, Goldman Sachs, one of the most influential banks in commodity markets, recommended clients close their bets on higher prices for global benchmark Brent crude, warning prices could continue to fall.

Front-month May Brent, which expires on Monday, traded as low as $100.02 a barrel in early US activity, and was down $2.86 to $100.25 a barrel by 1:22 pm EDT (17:22 GMT).

Over the past 10 sessions, prices have dropped 9.7 percent, sending the contract to just over 26 on the 14-day Relative Strength Index. Commodities are generally considered oversold if they dip below 30 on that index.

The more actively traded June contract gave up $2.39 to $100.61 a barrel.

US crude traded down $2.54 to $88.75 a barrel, to the lowest level since midDecember.

US gasoline futures gave up 1.6 percent to trade at $2.76 per gallon, hitting the lowest level for this time of year since 2010.

Monday’s selling was kick-started by data showing China’s economic growth unexpectedly slowed in the first three months of 2013, falling to 7.7 percent from 7.9 percent in the final quarter of last year. Economists had forecast 8 percent growth.