LONDON (Reuters) - Gold dropped as much as 6.3 percent on Monday to below $1,400 per ounce for the first time since March 2011 as the market's downward momentum gained speed after more than four months of investor selling.þþInvestors ditched gold along with other commodities from oil to copper after a less-than-forecast growth in China's gross domestic product in the first quarter stoked doubts about the health of the global economy.þþThis added to last week's fears of central bank sales from Europe, prompted by a proposed sale of Cyprus bullion holdings, and concerns about a reduction in monetary stimulus. Adding to selling pressure, exchange-traded funds hit their lowest in more than a year on Friday.þþSpot gold dropped as low as $1,384.69 an ounce and was at $1,409.26 by 1048 GMT, still down 4.7 percent.þþU.S. futures for June delivery extended losses to fall more than 5 percent as Tokyo gold futures tumbled around 8 percent, marking Japanese futures biggest daily fall since September 2011.þþÿWe are entering a phase of additional long liquidation by ETF investors and short-selling from hedge funds, which will continue in the foreseeable future,ÿ Saxo Bank senior manager Ole Hansen said.þþÿPurely looking at the charts, support would now be at $1,300, which would equate the 50 percent retracement from the rally from the Lehman crack in 2008 to the September 2011 record high.ÿþþOther precious metals were also hit by heavy selling, with silver falling to its lowest since October 2010, platinum at its weakest since August last year, and palladium hitting a three-month low.þþBy contrast, hedge funds and money managers raised their net longs in gold futures and options in the week to April 9, a report by Commodity Futures Trading Commission (CFTC) showed on Friday.þþGold slipped into a bear market last week, plunging more than 5 percent on Friday to below $1,500 for the first time since July 2011.þþInvestors cut exposure to gold, with total holdings at the world's major bullion gold-backed exchange-traded-funds falling to their lowest since early 2012.þþHoldings of the largest fund, New York's SPDR Gold Trust GLD fell a further 22 metric tons on Friday.þþInvestors have recently been dumping gold for the past three straight weeks. Even escalating tensions on the Korean peninsula have failed to burnish its safe-haven appeal.þþCyprus's plan to sell gold reserves to raise around 400 million euros ($525 million) has raised concerns other indebted euro zone countries could follow suit, while signs of a tentative recovery in the United States could further dent gold's appeal.þþÿWhat we now see is panic selling, perhaps triggered by the Fed's stimulus view. The Fed has given the signal that there's a possibility to reduce QE, and that took a lot of trust out of gold,ÿ said Dominic Schnider, an analyst at UBS Wealth Management.þþÿAs the Fed becomes less reflationary and the ECB not willing to end its deflationary policy, the balance towards inflation is shifting dramatically. And people recognize that in an environment where you have no inflation is a powerful driver to get out of the metal.ÿþþWhile policy doves currently hold sway over Chairman Ben Bernanke and the majority of Fed policymakers, minutes from last month's policy meeting suggested the quantitative easing program could draw to a close by year-end, earlier than some economists had expected.þþPremiums for gold bars ticked up to $1.50 to the spot London prices in Singapore, versus $1.20 last week.þþAlthough jewelers could snatch the opportunity to stock up, a meager increase in premiums for gold bars suggested that consumers were staying on the sidelines.þþSilver was down 10 percent to $23.27 an ounce, having fallen to its lowest since October 2010 at $22.97.þþSpot palladium dropped 6 percent to its lowest since January 8 at $665.75 and was then seen at $678.72, down 4.1 percent, while spot platinum was down 3 percent at $1,439.99 an ounce.þþ(Additional report by Lewa Pardomuan and Manolo Serapio Jn in Singapore; Editing by Jane Baird)
Source: NY Times
