Concerns about China hit gold and other commodities
By Claudia Assis and Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures fell Tuesday, moving in step with weakness in global stock markets and softer commodity prices as concerns about a slowdown in China flared up.
Gold futures for April delivery GCJ2 -0.85% fell $13.40, or 0.8%, to $1,653.70 an ounce on the Comex division of the New York Mercantile Exchange after tapping a low of $1,641.20.
Gold rose $11.50, or 0.7%, to settle at $1,667.30 on Monday.
Traders became nervous that top commodities consumer China may be due for a slowdown after comments from the president of BHP Billiton Ltd.’s BHP -3.38% UK:BLT -4.05% iron-ore division.
BHP’s Ian Ashby told reporters in Perth on Tuesday that China’s iron-ore demand is easing and that demand growth will slow to single digits. The news sent mining stocks lower in Asia and Europe and weighed on commodity prices across the board. Read more on BHP executive's comments
“Anything indicating that China is slowing is going to hit risk assets in general,” said Matt Zeman, a strategist at Kingsview Financial in Chicago. For the better part of last year gold behaved more as a regular commodity, an asset class considered riskier, than as a safe-haven instrument, he added.
Some profit-taking and a slightly stronger dollar also contributed to the downdraft, he said. Gold seems to be finding a floor at current levels, however, with the next couple of sessions crucial to see whether it will test the next level of support around $1,630 and $1,550 an ounce.
The dollar index DXY +0.16% , which measures the U.S. unit against a basket of rivals, traded at 79.582, compared with 79.451 in late North American trading Monday.
Meanwhile, Indian jewelers have extended the first nationwide strike in seven years for two additional days, asking that the government cancel a new excise duty of 1% on nonbranded gold jewelry.
“This ‘strike,’ which the industry association claims has been joined by more than 90% of the country’s 300 thousand gold jewelers, has now been ongoing for four days and looks set to continue,” said analysts at Commerzbank.
“An association meeting with the Indian finance minister, at which there were calls for the duties to be revoked, would appear to have produced no results,” they said. “This is likely to have a negative impact on demand, and therefore imports, at least for the time being, which could prevent any renewed climb in the price of gold.”
Holdings in gold-backed exchange-traded products have dropped for the first time in three weeks, the Commerzbank analysts said in a note.
“ETF investors sold holdings on a significant scale” on Monday, they said. “ETF investors, who are regarded as taking a longer-term view, are remaining loyal to gold despite yesterday’s outflows; unless there are inflows, however, the price is likely to gain little impetus from this side,” they said.
Among other metals, May silver SIK2 -2.14% fell 71 cents, or 2.2%, to $32.26 per ounce.
Copper for the same month HGK2 -2.01% fell 9 cents, or 2.3%, to 3.82 a pound.
April platinum PLJ2 -1.84% fell $30.50, or 1.8%, to $1,654.20 an ounce.
Sister metal palladium for June delivery PAM2 -1.53% fell $11.60, or 1.6%, to $696 an ounce.
