Gold futures dropped to the lowest since June, leaving prices on the brink of a bear market, as signs of slowing U.S. economic growth sparked a drop in equities and commodities. Silver fell to an eight-month low.
U.S. companies added 158,000 workers in March, the fewest since October, ADP Research Institute reported today, while the Institute for Supply Management’s index of non-manufacturing businesses fell to 54.4 in March from 56 in the prior month. The Standard & Poor’s GSCI index of 24 raw materials tumbled 2.1 percent, heading for the biggest drop since Nov. 7. The S&P 500 equity index slid the most since Feb. 25.
“There is selling across the board,” David Meger, the director of metals trading at Vision Financial Markets in Chicago, said in a telephone interview. “The market is reacting to the U.S. data, and it seems as if there is no interest to look at gold as a safe-haven asset.”
Gold futures for June delivery tumbled 1.4 percent to settle at $1,553.50 an ounce in New York, after touching $1,549.70, the lowest since June 28. The metal has declined 7.3 percent in 2013, after rallying the past 12 years.
Today’s settlement leaves prices down 18 percent from a record close of $1,891.90 on Aug. 22, 2011, bringing it closer to the threshold of the 20 percent benchmark for a bear market.
Global government stimulus has cut the likelihood of further banking and liquidity crises and reduced the need for a protection of wealth, Credit Suisse Group AG wrote in a report today. The bank cut its 2013 gold forecast by 9.2 percent to $1,580 and lowered its silver estimate by 11 percent to $28.50.
Silver futures for May delivery slid 1.7 percent to $26.797 an ounce on the Comex, after dropping to $26.67, the lowest since July 24. The metal closed more than 20 percent below its Oct. 4 settlement in New York on April 1.
“Silver is suffering because of weak industrial demand,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Prices may continue to remain under pressure.”
Trading was 45 percent above the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
On the New York Mercantile Exchange, platinum futures for July delivery dropped 2.1 percent to $1,541.90 an ounce, the biggest drop since Feb. 20. Earlier, prices dropped to $1,534, the lowest since Dec. 31.
Palladium futures for June delivery retreated 1.8 percent to $755.45 an ounce, the second straight loss. Trading was 31 percent below the 100-day average for this time of day.