Gold prices tumbled to a two-year low and crude oil slumped to a nine-month trough this week, as commodity markets were rocked by weaker-than-expected first-quarter economic growth in key consumer China.
Investors were spooked after China released data on Monday showing growth in the world’s No. 2 economy slowed to 7.7 percent in the first three months of the year, below forecasts and indicating a recent pick-up remained fragile.
Many raw materials recovered ground later in the week, in line with global stock markets, as bargain-hunters moved in.
PRECIOUS METALS: Gold nosedived to US$1,321.95 an ounce on Tuesday, hitting a level last seen at the start of 2011.
The metal had already sunk 10.9 percent on Monday — its sharpest daily slump since 1983 — owing to weak Chinese growth data and reports that Cyprus was planning to sell some of its gold reserves.
“It’s the speed of it and the extent of the sell-off that shocked everybody,” said Kelly Teoh, a market strategist at traders IG Markets in Singapore.
“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,” Teoh said.
Meanwhile, silver recoiled on Tuesday to US$22.07 an ounce — hitting a low point last witnessed in October 2010. Platinum reached a 14-month low of US$1,375.50 an ounce and palladium a near six-month trough at US$647.25 an ounce.
By late Friday on the London Bullion Market, the price of gold tumbled to US$1,405.50 an ounce from US$1,535.50 a week earlier.
Silver slid to US$23.66 an ounce from US$27.40.
On the London Platinum and Palladium Market, platinum dropped to US$1,425 an ounce from US$1,514.
Palladium declined to US$677 an ounce from US$715.50.
OIL: London’s Brent North Sea crude tumbled under US$100 a barrel for the first time in nine months on concerns over slowing Chinese economic growth and weak energy demand, analysts said.
The contract on Thursday slumped to US$96.75 — the lowest level since July 2 last year.
“The optimism of the first quarter of 2013 [shown by markets] is nowhere to be seen,” said Tamas Varga, analyst at PVM oil brokers.
“It was the US that supported risky assets in the first three months of the year and it is the US that is responsible for the change in the sentiment. Disappointing job data turned the mood sour in April and of course the downgrading of China by Fitch and lower-than-expected Chinese GDP growth are not helping either,” Varga said.
Concerns over weaker energy demand have also set in after the International Energy Agency and OPEC countries recently lowered their global demand forecasts.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in June stood at US$99.73 a barrel compared with US$102.12 for the May contract a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for May slumped to US$87.97 a barrel from US$91.19.
BASE METALS: Base or industrial metal prices mostly retreated, with nickel hitting the lowest point for almost three years, at US$15,180 a tonne.
“We are clearly in the throes of a massive selloff in a number of complexes, as investors are rightly concluding that global growth prospects remain too tepid to sop up the growing surpluses evident in a number of sectors, including steel, aluminium and copper,” said Edward Meir, an analyst at broker INTL FCStone.
By Friday on the London Metal Exchange, copper for delivery in three months slid to US$6,921 a tonne from US$7,420 a week earlier.
Three-month aluminum grew to US$1,885 a tonne from US$1,858.
Three-month lead declined to US$2,001 a tonne from US$2,039.
Three-month tin dropped to US$20,760 a tonne from US$21,950.
Three-month nickel reversed to US$15,221 a tonne from US$15,850.
Three-month zinc climbed to US$1,877 a tonne from US$1,868.