COMMODITIES-Broad risk flight; gold's worst two days since 1983

Mon Apr 15, 2013 5:00pm EDT

* Bullion loses golden touch; CRB index down most in 16
months
    * Oil, copper, silver fall hard and fast
    * Slump deepened by China's less-than-expected Q1 GDP growth


    By Veronica Brown and Barani Krishnan
    LONDON/NEW YORK, April 15 (Reuters) - Gold closed sharply
lower on Monday after its biggest two-day drop in 30 years and
oil, copper and grains prices also tumbled as investors fled
financial markets after disappointing Chinese economic data
underscored global growth worries.
    With U.S. stocks on track for their first two-day losing
streak in a month, few assets appeared to be taking in new money
amid growing caution the world economy was headed for another
recession. U.S. Treasuries rose in late trading after news of an
explosion at the Boston Marathon. 
    "I think everyone's going cash. People are either not
deploying capital or just taking profit," said Sean McGillivray,
vice president of asset allocation at Oregon's Great Wealth
Pacific Management, a commodities-focused asset manager.
    Commodities-linked currencies such as the Australian and New
Zealand dollars declined more than 1 percent against the U.S.
currency, weighing further on energy, metals and crop
prices. 
    "Nearly every commodity has taken a hit today. The only
markets in the world that have been kind of detached from this
are the German and French stock markets and U.S. large cap
stocks," said James Dailey at Pennsylvania-based TEAM Financial
Asset Management.
    The 19-commodity Thomson Reuters-Jefferies CRB index
, a globally watched indicator, fell 2.2 percent for
its sharpest one-day loss since December 2011. The index hit its
lowest level since the end of June 2012.
    
    GOLD TUMBLES
    Gold, which dropped 5 percent on Friday, sunk another 9
percent on Monday, sliding deeper into bear territory. The
precious metal's spot price fell over $30 in a matter of
minutes at one point, breaching support at $1,400 per ounce.
    The sharp selloff in gold came as an "unexpected event" to
many hedge funds, said long-time gold investor John Burbank, who
runs San Francisco-based hedge fund Passport Capital.
 
    Oil fared scarcely better than gold, sliding nearly 3
percent. Other precious metals were caught in the downdraft,
with silver dropping nearly 12 percent. Industrial metals
plummeted, with copper at its lowest price in over a year
.
    Wheat led the decline in grains, falling 3 percent. In
other crops, arabica coffee plumbed a near three-year
low.  
    Both oil and gold have been under substantial selling
pressure since last week. Bullion has come off the most,
shedding about 10 percent since last Monday's close, while crude
has lost around 4 percent.
    Gold was under pressure from a variety of factors, including
a proposed sale of Cypriot gold holdings, and more fund-based
investors headed for the exits after China's data on Monday. 
    China's economy grew 7.7 percent in the first quarter,
undershooting market expectations for an 8.0 percent expansion
and frustrating investor hopes that the world's No. 2 economy
would rebound after posting its weakest growth in 13 years in
2012. 
        
   
    
    CHINA DEEPENS SELLOFF 
    The weaker-than-forecast GDP growth was backed by slower
increases in China's industrial production and fixed-asset
investment, despite strong lending growth in March. Besides
being the world's No. 2 economy, China is the biggest buyer of
industrial metals and many other commodities.
    "If you want to be worried about China, there's plenty to
keep you awake at night," said Sean Corrigan, chief investment
strategist at Diapason Commodities Management in Switzerland. 
    By 4:00 p.m. EDT (2000 GMT), spot gold hovered around
$1,355 an ounce, after hitting a two-year low at $1,349.44. The
liquidation in gold was widespread, with selling pressure coming
from exchange-traded funds to even physical buyers in China and
India, who have long supported the shiny metal. 
    "This is a market that has only got one thing on its mind
... get me out," said David Govett, head of precious metals at
Marex Spectron in London.
    Brent crude oil sank below $101 a barrel to a
nine-month low, threatening to break below $100 for the first
time since early July. It was down about 15 percent from this
year's peak of $119.17 reached in early February. 
    Prior to the latest Chinese and U.S. data, the International
Energy Agency, the U.S. Energy Information Administration and
the Organization of Petroleum Exporting Countries had already
lowered their global oil demand growth for 2013.
    
    FED EXTENDS WORRY
    Aside from worries over the economy, investors were also
spooked by thoughts that the U.S. Federal Reserve may end sooner
rather than later its bond-buying binge that has supported
commodity and stock prices for over two years now. The Fed
started the stimulus action to help the economic recovery after
the financial crisis.
    "What we now see is panic selling, perhaps triggered by the
Fed's stimulus view," said Dominic Schnider, an analyst at UBS
Wealth Management.
    Minutes of the U.S. Federal Reserve's March policy meeting
released last week showed some officials keen on ending the
stimulus this year, though the minutes predated last month's
poor non-farm payrolls data and Friday's weak retail sales. 
    In copper, the benchmark three-month contract in London
 fell to its lowest level in 1-1/2 years to $7,085 a
tonne, while aluminum hit a 3-1/2 year low.    
 Prices at 4:15 p.m. EDT (2015 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    88.28    -3.01  -3.3%   -3.9%
 Brent crude                100.26    -2.85  -2.8%   -9.8%
 Natural gas                 4.137   -0.085  -2.0%   23.5%
 
 US gold                   1360.60  -140.40  -9.4%  -18.8%
 Gold                      1356.97  -121.38  -8.2%  -19.0%
 US Copper                  329.15    -7.75  -2.3%   -9.9%
 LME Copper                7202.00  -204.50  -2.8%   -9.2%
 Dollar                     82.395    0.084   0.1%    7.3%
                             
 
 US corn                    646.75   -11.75  -1.8%   -7.4%
 US soybeans               1395.00   -18.00  -1.3%   -1.7%
 US wheat                   693.75   -21.00  -2.9%  -10.8%
 
 US Coffee                  134.45    -0.80  -0.6%   -6.5%
 US Cocoa                  2243.00   -18.00  -0.8%    0.3%
 US Sugar                    17.79    -0.24  -1.3%   -8.8%
 
 US silver                  23.361   -2.970 -11.3%  -22.7%
 US platinum               1424.20   -71.10  -4.8%   -7.4%
 US palladium               667.00   -42.10  -5.9%   -5.2%
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