Gold plunges to two-year low

Gold plunges to two-year low

POSTED: Monday, April 15, 2013 - 8:00am

UPDATED: Monday, April 15, 2013 - 10:14am

Gold fell sharply Monday, dropping to its lowest level in two years, after a slowdown in China sparked a broader sell-off in commodity prices.

The world's second biggest economy grew by 7.7% in the first quarter of the year, down from 7.9% in the fourth quarter of 2012.

The growth number was higher than the Chinese government's target for 2013 but much weaker than the 8% most economists were expecting.

Other China data also raised doubts about the health of the global economy.

Industrial production growth in China slowed to 8.9% in March.

Economists had been forecasting growth of about 10%.

Gold lost about $100 an ounce to trade at just over $1,400, continuing Friday's sharp sell-off, when the precious metal lost about 5%.

It is now in bear market territory, having fallen 27% from its record high last year.

Other metals including silver, copper and platinum were also weaker, and oil lost 3%.

Investors have been turning their backs on gold recently as equity markets in the United States have gone on a record-breaking run, pouring money into stocks funds instead.

Reports last week that Cyprus may sell gold worth 400 million euros as part of an international rescue added to the exodus, in part because of concerns that other European central banks with much bigger reserves may do the same.

Last week, Goldman Sachs and Deutsche Bank cut their forecasts for the price of gold, citing improving prospects for the U.S. economy, which would reduce the need for further monetary stimulus.

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