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Tuesday, April 16, 2013
Gold has worst two-day loss in 30 years
16 Apr 2013
NEW YORK — Investors yesterday dumped commodities and stocks in a broad sell-off that gave gold its worst two-day loss in 30 years after weak demand figures from China fanned concerns the world economy is stumbling.
Gold dragged other metals lower as its price plunged to a more than two-year low, while on Wall Street, stocks dropped more than 2 per cent for the S&P 500’s worst day since Nov 7. Spot gold dropped as much as 9 per cent yesterday alone, falling as low as US$1,336.04 an ounce.
In the last two sessions, gold has fallen over 13 per cent, for the worst two days since late February 1983. Gold was recently at US$1,346.26.
Strategists have cited various reasons for gold’s slump, including plans by Cyprus to sell excess gold reserves and feared selling from other central banks. The already sharp correction has caused short-term investors to flee the asset — the SPDR Gold Trust hit its highest daily volume with 92.44 million shares traded, while the ETF lost 8.8 per cent.
China’s recovery unexpectedly stumbled in the first three months of the year, as it reported its annual growth rate eased to 7.7 per cent from 7.9 per cent in the final quarter of last year. Economists had forecast 8 per cent growth.
Industrial output in China last month also undershot expectations and added to investor sensitivity after recent disappointing economic data out of the US.
Mr Nic Brown, head of commodities research at Natixis in London, said: “China makes up 40 per cent of demand for base metals and all the growth in demand for oil is coming from the developing world. So to see weakness in China is bad for commodities, generally.” REUTERS