Spot gold hit a session low on April 18th 2013
Copper and oil sagged to multi-month lows and gold closed in on its weakest level in two years on Thursday as a brutal commodities sell-off continued, with investors opting for cash given the uncertainty over the health of the global economy.
Recent disappointing data from the United States to China has cut appetite for riskier assets, and commodities have suffered the brunt of the selling led by gold which may be on track this year to end its uninterrupted 12-year rally.
Copper broke below $7,000 a tonne for the first time since late 2011 and dragged down other base metals, while gold tripped as much as 2.7 percent as holdings in the world’s top gold-backed exchange-traded fund hit a three-year low.
Brent crude steadied after touching a new low since July, but remained well below the $100 per barrel mark.
“Confidence in commodities as an asset class has been damaged by the tumble in gold prices,” said Standard Chartered analyst Judy Zhu in Shanghai.
Spot gold hit a session low of $1,339.86 an ounce, near Tuesday’s two-year trough of $1,321.35. By 0503 GMT, gold was off 0.7 percent at $1,367.36, down about a quarter from last year’s peak and shedding 18 percent so far this year.
Thursday’s broad-based sell-off began in copper, with the London price falling as much as 4 percent to $6,800 a tonne, the lowest since Oct. 20, 2011, triggering declines in other base metals.
London nickel touched its lowest since July 2009 while zinc and lead hit multi-month troughs. Shanghai copper fell by its downside limit.
SENTIMENT OVER DATA
The commodities rout began on Friday on the heels of weak U.S. retailsales data and worries over Cyprus’ possible gold sales to fund part of its bailout.
It intensified on Monday after China announced its economy grew less than economists had expected, frustrating investors who were looking at a quicker recovery in the world’s No. 2 economy.
Gold fell more than 8 percent on Monday in its steepest slide in three decades while Brent crude fell below $100 a day later, with the selling pressure picking up again on Wednesday.
Some analysts say the selldown may have been overdone. While China’s 7.7 percent gross domestic product growth was slower than market forecasts, the underlying sub-sectors of the economy look fine, said Graeme Train, commodity analyst at Macquarie.
“You have fantastic auto sales, white good orders are improving, even construction machinery is seeing a pickup in sales,” Train said.
“Nothing looks that bad, but it’s just that sentiment is just getting absolutely smashed.”
Oil came off the day’s lows, with Brent crude little changed at $97.55 a barrel, after hitting a bottom of $96.75. U.S. crude also steadied at $86.53 per barrel, off the session’s low of $85.61. - Reuters
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