Gold slumped below $1,400 an ounce to a two-year low after dropping into a bear market last week as optimism that a U.S. recovery will curb the need for stimulus cut demand for a protection of wealth, according to Bloomberg report.
Gold futures for June delivery slid 6.3 percent to $1,406.80 an ounce by 7:51 a.m. on the Comex in New York, reaching as low as $1,385 as prices fell $116.40. Last week’s 4.7 percent drop was the most since December 2011. Futures trading volume was five times the average in the past 100 days for this time of day, according to data compiled by Bloomberg. Gold for immediate delivery was down 5 percent at $1,408.29 in London.
Bullion futures slid 4.1 percent on April 12, taking losses to more than 20 percent since the record close in August 2011, and meeting the common definition of a bear market. They fell as much as 7.8 percent today to the lowest since March 15, 2011. Holdings in the SPDR Gold Trust (GLD), the biggest gold-backed exchange-traded product, are the lowest in almost three years and hedge funds have cut bets on higher prices by 72 percent since October.
The metal climbed for a 12th year in 2012 as nations pledged more stimulus to bolster growth. Prices are down 16 percent this year as some Federal Reserve policy makers favor pulling back this year on $85 billion in monthly debt-buying and as U.S. equities reached a record. The turn in the gold cycle is quickening and investors should sell, Goldman Sachs Group Inc. said April 10. Prices also fell last week on speculation Cyprus may sell gold.