Arab Today, arab today gold claws back losses after biggest fall in 30 years
Last Updated : GMT 08:53:10
Arab Today, arab today
Arab Today, arab today

Gold claws back losses after biggest fall in 30 years

Arab Today, arab today

Arab Today, arab today Gold claws back losses after biggest fall in 30 years

London - AFP

Gold prices clawed back some losses on Tuesday after suffering their heaviest slump in 30 years owing to weak Chinese growth data and reports that Cyprus was planning to sell some of its reserves of the precious metal. 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. Gold had sunk as low as $1,338.00 at one point in New York on Monday -- which marked a 10.9-percent fall and its sharpest slump since 1983. \"The gold price collapsed ... and thus suffered its highest daily loss in percentage terms since February 1983,\" said Commerzbank analyst Carsten Fritsch. \"In absolute terms, the loss of around $135 per troy ounce actually constituted the highest daily fall of all time.\" On Tuesday at 1330 GMT, an ounce of gold cost $1,392.94 on the London Bullion Market after plunging earlier in the day to $1,321.95, the lowest level since January 2011. 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. 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 that 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, said in a market commentary that the slump appeared to have been triggered by speculators. He added: \"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 data. Once trading calms down, we expect gold to stage at least a partial recovery.\"

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