gold prices claw back losses after worst 30year low
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Cyprus reserves sell-off reports damage trade

Gold prices claw back losses after worst 30-year low

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Arab Today, arab today Gold prices claw back losses after worst 30-year low

Gold prices dropped 10.9% on Monday, the largest slump since 1983
Hong Kong – Arabstoday

Gold prices dropped 10.9% on Monday, the largest slump since 1983 Hong Kong – Arabstoday Gold prices clawed back some losses Tuesday after suffering their heaviest slump in 30 years triggered by weak Chinese growth data and reports Cyprus was planning to sell part of its reserves .
Analysts said the 13 percent drop in prices between Friday\'s open and Monday\'s close could show gold\'s 12-year bull-run was at an end, with investors turning away from the metal, which is traditionally a hedge against inflation.
At 1045 hrs GMT, an ounce of gold cost $1,391.10. The commodity enjoyed a lift after sinking to as low as $1,338.00 at one point in New York on Monday -- a 10.9 percent fall and its sharpest slump since 1983.
Investors were spooked after China released data Monday showing growth in the world\'s number two economy had slowed in the first quarter to 7.7 percent, below forecasts and indicating a recent pick-up remained fragile.
The data also hit equity markets, while other commodities also tumbled, with the May contract for Brent crude falling below $100 a barrel for the first time since July. China is a huge importer of oil to drive its vast economy.
\"It\'s the speed of it and the extent of the sell-off that shocked everybody,\" Kelly Teoh, a market strategist at IG Markets in Singapore, told AFP. \"For the rest of the week it\'s going to look quite bearish.\"
The longer-term view is that with inflation expectations still flat -- as US and Chinese data indicate -- people are no longer inclined to buy gold as a hedge against rising prices.
\"Gold has had a 12-year run. It\'s done really well. But if you\'re holding a position and you\'re seeing you\'re getting a better yield in the cash markets it\'s a natural move,\" said Teoh.
Adding to unease were reports last week that the central bank in Cyprus is looking at selling some of its 14 tonnes of gold to help pay for a bailout agreed with the European Union and International Monetary Fund.
Joyce Liu, investment Analyst at Phillip Futures in Singapore, said such a move fuelled concerns that other troubled countries could follow suit as they struggle with ongoing debt woes.
Liu also said traders were likely moving out of the precious metal, which is seen as a safe bet in times of economic uncertainty, as the US recovery picks up and the eurozone crisis eases.
In Hong Kong, jeweller Amy Lee said buyers who had rushed to buy gold after Friday\'s losses had cooled off on Tuesday as they wait for prices to fall further.
\"We have seen fewer customers (Tuesday), I think that\'s because they are waiting to see if the prices will continue to fall,\" said Lee, from Pak Kong Jewellery & Goldsmith.
In India, the world\'s largest consumer and importer of the precious metal, eagerness to buy gold was also tempered by caution prices could fall further.
\"We have not seen such a sharp fall for years,\" Rajesh Solanki of Zaveri Kapoorchand Lalchand in Mumbai\'s famed Zaveri Bazaar market told AFP. \"People are eager to buy but are also cautious.\"
Demand for gold in India is expected to pick up during the upcoming wedding season in late April and May.
Analyst Anand James of Geojit BNP Paribas Financial Services said investment demand would also pick up, describing it as a \"buyer\'s market.”
Singapore-based investment guru Jim Rogers said he was among those who would not buy yet as there was more room for prices to go down.
\"I have not been buying gold because it needs a correction. Gold\'s only had one correction of over 30 percent in 12 years, which is very unusual,\" the Straits Times newspaper quoted Rogers as saying.
\"If it goes down low enough, I\'ll start buying it again.\"
Julian Jessop, chief global economist at Capital Economics in Singapore, said in a market commentary that the slump had been triggered by \"speculative traders, rather than any change in the long-term or fundamental drivers.”
\"Gold has also been caught up in the broad-based weakness in commodity markets, including oil and industrial metals, due to softer US and Chinese economic data. Once trading calms down, we expect gold to stage at least a partial recovery,\" he said.

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