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By Catholic Online (NEWS CONSORTIUM)

4/16/2013 (2 years ago)

Catholic Online (www.catholic.org)

Price of gold dropped by more than $30 in a matter of minutes

After a period of robust growth, China's economic growth slowed unexpectedly in the first three months of the year. The slowdown spurred on widespread economic panic. In reaction, the price of gold plummeted to its lowest point in more than two years. The world's second-largest economy grew by 7.7 percent over a year earlier, down from the previous quarter's 7.9 percent, and short of hopes for about eight percent.

The S & P's 500 index slumped 18 points to 1,570, a loss of 1.2 percent. Of the 10 industry groups in the S&P 500, materials and energy stocks fared the worst, sliding three percent.

The S & P's 500 index slumped 18 points to 1,570, a loss of 1.2 percent. Of the 10 industry groups in the S&P 500, materials and energy stocks fared the worst, sliding three percent.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

4/16/2013 (2 years ago)

Published in Business & Economics

Keywords: China, gold, stock market, slowdown, production, grain


LOS ANGELES, CA (Catholic Online) - The Dow Jones Industrial Average dropped more than 155 points, or approximately one percent today. The NADAQ average was down more than 50 points, more than one and a half percent.

The S & P's 500 index slumped 18 points to 1,570, a loss of 1.2 percent. Of the 10 industry groups in the S&P 500, materials and energy stocks fared the worst, sliding three percent.

The FTSE 100 Index in London slumped 72.1 points to 6312.3, with fears over Chinese demand causing mining stocks to fall by as much as 13 percent. The index was down 74.08 at 6310.31 towards the end of the day.

It must be stressed that an economic recovery is still under way but is "really very soft - very slow and gradual," Societe Generale economist Wei Yao says. Other economists are quick to assuage any panic on Wall Street. "I think you're getting some panic selling right now," CEO of Planned Financial Services Frank Fantozzi added.

"People who have been holding on to gold expecting a rebound are now thinking, 'I better get out.'"

Analysts have warned that China's recovery from its deepest slump since the 2008 global crisis is weak and are being supported by bank lending and government-led investment.

A slowing of Chinese growth coupled with a demand for goods, ranging from iron ore to factory technology and consumer goods -- could send out ripples in the global economy.

The price of gold dropped by more than $30 in a matter of minutes at one point. Shortly before noon, the gold spot price was down almost nine percent today, at $1,370 per ounce.

Gold is already under pressure from a variety of factors, which include a proposed sale of Cypriot gold holdings and disappointing U.S. numbers last week.

Investors slashed their exposure to commodities, with oil, copper and silver falling hard and fast. Oil fell nearly three percent, silver dropped 10 percent, and industrial metals plummeted. Copper, in particular hit it's lowest in over a year. Wheat, corn and soybeans were all down.

An analyst at UBS Wealth Management Dominic Schnider says that with gold, "what we now see is panic selling, perhaps triggered by the Fed's stimulus view.

"The Fed has given the signal that there's a possibility to reduce QE (quantitative easing), and that took a lot of trust out of gold.

"And people recognize that an environment where you have no inflation is a powerful driver to get out of the metal."

Adding to the bad news is the fact that investment bank Goldman Sachs earlier predicted that the price of gold could weaken further.

The warning came days after French bank Societe Generale put out a report called The End Of The Gold Era, predicting gold would keep sliding this year and next.

"If you want to be worried about China, there's plenty to keep you awake at night," Sean Corrigan, chief investment strategist at Diapason Commodities Management in Switzerland says.



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