This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Gold Prices Keep Sliding as China Slashes Growth Expectations

NEW YORK ( TheStreet ) -- Gold prices continued to fall Monday after China slashed growth estimates to an eight-year low of 7.5%.

Gold prices fell 3.5% last week, putting in the largest one-week decline since the week of December 18. The slide was continuing Monday. Gold for April delivery was falling $8.40 to $1,701.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,718 and as low as $1,694.40 an ounce, while the spot price was losing $9.20, according to Kitco's gold index.

Silver prices were sinking 83 cents to $33.69 an ounce while the U.S. dollar index was falling 0.13% at $79.301.

Investors were selling equities after China reduced its economic growth target for the year and a gauge of business activity in the eurozone declined. Chinese Premier Wen Jiabao slashed China's 2012 economic growth target to an eight-year low of 7.5%, citing high inflation and a tepid worldwide economic outlook. China has been among the fastest-growing economies in recent years, outstripping the performance of developed nations such as the U.S. and U.K.

Meanwhile, the private-sector HSBC China services index showed that the country's services sector progressed at its fastest pace in four months last month, but was markedly below its long-term trend. The private-sector HSBC China Services Purchasing Managers' Index rose to a seasonally adjusted 53.9 in February from 52.5 in January.

"Proving for the nth time that what happens in China is a pivotal impact factor to the commodities' space, the most recent development in that country sent base and precious metals prices, along with most global equity markets, lower overnight," said Jon Nadler, senior metals analyst with Kitco Metals. "The first forecast for lower economic growth in eight years for that country derailed many an asset as the new trading week commenced. Gold and silver were clearly not immune to the negative news."

In Europe, Markit Economics said that its composite purchasing managers' index for the continent fell to 49.3 in February from the earlier estimate of 49.7 and from the previous month's reading of 50.4. The below-50 reading indicates business activity contracted last month.



In U.S. economic news, data on factory orders and non-manufacturing activity came in better-than expected. January factory orders fell 1% according to the Census Bureau. A slide of 1.6% was expected by analysts surveyed by Thomson Reuters. Meanwhile December's originally reported 1.1% jump in factory orders was upwardly revised to a 1.4% gain.

The Institute for Supply Management's non-manufacturing index showed a much better than expected reading of 57.3 for February, up from 56.8 in January. Analysts polled by Thomson Reuters were forecasting a reading of 56 for last month.

A report on global gold production has raised fears that supplies may be dwindling. A report from bullion dealer GoldCore noted that of the world's four largest gold producers, only China achieved gains. Australia, the U.S. and South Africa saw declines.

This further suggest the possibility of peak gold production," said GoldCore. "Chinese gold is used in China to meet the rapidly growing demand for gold jewellery and coins and bars as stores of value." As a result, the balance between supply and demand is likely toremain tight.

Mining stocks were following prices lower on Monday. Among the biggest losers were Great Panther Silver (GPL - Get Report), shedding 4.6% to $2.46, and Freeport-McMoRan (FCX - Get Report), falling 4.5% to $40.13. Eldorado Gold (EGO - Get Report) was losing 4.4% to $14.24 and Silver Wheaton (SLW - Get Report) was down 3.9% to $36.10.

-- Written by Ross Tucker in New York.



>To contact the writer of this article, click here: Ross Tucker.

>To follow the writer on Twitter, go to http://twitter.com/rosstucker.

>To submit a news tip, send an email to: tips@thestreet.com.



Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
EGO $5.79 4.70%
FCX $21.63 2.50%
GPL $0.61 0.98%
SLW $21.59 0.70%
AAPL $128.45 -1.50%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs