Re: Gold tumbles, China data hits commodities, stocks
Gold sees post-Fed ‘bloodbath’, hits 2 1/2 year low
Copper tumbles after weak China data
By William L. Watts and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) —
Gold temporarily plunged below $1,300 an ounce Thursday to trade at levels last seen 2 ½ years ago, a day after Federal Reserve Chairman Ben Bernanke said the central bank could move as early as this year to begin slowing the flow of monetary stimulus to the economy.
“As a trader said to me a few minutes ago, it’s a bloodbath at the moment, with most technical support levels being broken, we could still see $1,280, then $1,265 being hit today,” said Austin Kiddle, director at Sharps Pixley, in emailed comments.
Gold for August delivery traded $66.90 lower at $1,307.10 an ounce, a drop of nearly 5%. Gold plunged as low as $1,285 in electronic trade--a level last seen in a most-active contract in September 2010, according to FactSet data.
The U.S. dollar shot up in the wake of Bernanke’s comments, a negative development for gold as a stronger dollar can make gold and other dollar-denominated commodities more expensive to those using other currencies.
Kiddle said gold may be overdue for consolidation next week and that July possibly could see a turnaround, but warned that “calling a bottom would be like trying to catch a knife.”
Futures prices turned lower after U.S. Federal Reserve Chairman Ben Bernanke on Wednesday said the central bank’s purchases of government bonds may be scaled back as early as this year, if economic activity improves in line with its forecasts.
The central bank is currently buying $85 billion a month of bonds in an effort to encourage economic growth. The central bank’s bond-buying program has helped bolster U.S. equity prices, and aggressive monetary easing in recent years has been credited for helping gold prices rally.
The “fundamentals look a little better to us, in particular the housing sector, which has been a drag on growth since the [financial] crisis, is now obviously a support to growth,” Bernanke said during a news conference after the conclusion of the Fed’s two-day policy meeting.
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