Gold declined for the second straight session after China announced the lowest economic growth target in seven years, curbing prospects for commodity demand and global growth.
The MSCI All-Country World Index dropped as much as 0.9 percent and the Standard & Poor’s GSCI index of 24 raw materials retreated as much as 0.7 percent after China cut the nation’s economic growth target to 7.5 percent from an 8 percent goal in place since 2005, according to Premier Wen Jiabao’s speech at the National People’s Congress today.
“China’s statements have dampened market sentiment today,” Stephen Platt, an analyst at Archer Financial in Chicago, said in a telephone interview.
Gold futures for April delivery fell 0.3 percent to settle at $1,703.90 an ounce at 2:04 p.m. on the Comex in New York. Prices dropped 3.7 percent last week, the most since Dec. 16, while the dollar gained 1.3 percent against a six-currency basket.
“Gold still faces near-term hurdles such as bouts of dollar strength, broad risk reduction and profit-taking,” Suki Cooper, an analyst at Barclays Capital in New York, wrote in a report today. Still, “this is a healthy correction and, in our view, the broader macro backdrop remains gold favorable, given the negative interest-rate environment, longer-term inflationary concerns and lingering sovereign debt uncertainties.”
Gold prices are in a 12th year of a bull run. Holdings in bullion-backed exchange-traded products rose 1 metric ton to a record 2,405.2 tons on March 2, data compiled by Bloomberg show. Hedge funds and other money managers increased bets on higher prices by 10 percent to 197,552 futures and options in the week ended Feb. 28, the highest level since Sept. 6, Commodity Futures Trading Commission data show.
Silver futures for May delivery fell 2.4 percent to $33.695 an ounce. It’s the best-performing precious metal this year with a gain of 21 percent.
On the New York Mercantile Exchange, platinum futures for April delivery declined 1.7 percent to $1,662.60 an ounce. The metal dropped 1.4 percent last week. Palladium futures for June delivery decreased 0.8 percent to $706.95 an ounce.