(Corrects headline and first paragraph that this is first bear
market for gold since last May, not first time in 12 years)
* U.S. gold futures hit lowest in 15 months
* Commodities, equities fall, dollar climbs
* ETF outflows, Cyprus gold sales still spooking market
By Clara Denina and Jan Harvey
LONDON, April 12 Gold fell below $1,500 per
ounce on Friday, a drop of more than 20 percent from its record
2011 highs, putting it in bear market territory for the first
time since last May.
Gold hit a low of $1,493.35. The metal was heading
for a 4.9 percent decline this week, its third such drop in a
row and the biggest since December 2011. It was down some 22
percent below the record peak hit in September 2011 at
An unexpected contraction in U.S. retail sales, which hurt
stocks and supported the dollar on Friday, added to pressures
building in the course of the week from several factors,
including a draft plan for Cyprus to sell bullion and outflows
from exchange-traded gold funds.
U.S. gold futures also hit their lowest since July 2011,
with gold for June delivery falling to as low as
$1,491.40 an ounce before recovering to $1,503.80, down 3.9
"The scale of the decline has been absolutely breathtaking.
We tried to rally and that just didn't get anywhere ... there
hasn't been any downside support, it's like a knife through
butter," Societe Generale analyst Robin Bhar said.
Precious metals sold off across the board, with silver
dropping the most, down 4.5 percent. Other commodities also came
under pressure, with Brent crude oil hitting an
The U.S. retails sales data also pushed stock markets lower,
with European shares down 1 percent and Wall Street stocks also
falling. The dollar rose, meanwhile, by 0.1 percent against the
"We've broken the key support level (around $1,535-$1,5340
per ounce). That's 20 percent below the $1,923 Comex all-time
peak, so we're now into a bear market," Bhar said.
A European Commission assessment of what Cyprus needs to do
as part of its European Union/International Monetary Fund
bailout earlier this week showed it was set to sell gold
reserves to raise around 400 million euros ($525 million).
While Cyprus' gold sale in itself is small, heavily indebted
euro zone nations such as Italy and Portugal could also find
themselves under increasing pressure to put their bullion
reserves to work.
"If Cyprus can break the gold market, then (there are) many
reasons to be worried, with Slovenia, Hungary, Portugal, Spain
and Italy in line," Milko Markov, an investment analyst at S.K.
Hart Management, said.
"It is a make-or-break moment for gold ... if the market
can't handle the reallocation and Cyprus, then there is really a
need for a bear market."
LONG-TERM TREND SUPPORT BREACHED
Gold's losses accelerated sharply after it fell through key
support at $1,521 an ounce, its December 2011 low. That formed
the base of the broad sideways trend channel it has held within
since its drop from record highs in September 2011.
A fall below this key area of support could signal further
losses are on the way, according to analysts who study past
price patterns for clues on the future direction of trade.
Commerzbank said in a weekly technicals report that a break
through this level was "medium-term bearish" and could lead to
the 200-week moving average at $1,434.15 being eyed.
Wary investors continued to cut exposure to gold, with total
holdings at the world's major bullion gold-backed
exchange-traded-funds (ETFs) falling to their lowest since early
Holdings of the largest fund, New York's SPDR Gold Trust
fell a further 2.1 tonnes, or 67,710 ounces on Thursday,
after a 17-tonne outflow on Wednesday.
"Investors are still cautious, and you see that looking at
the continued ETFs outflows," Standard Chartered analyst Daniel
Financial market watchers are awaiting the outcome of a
two-day meeting in Dublin beginning on Friday. Euro zone finance
ministers there said the necessary elements are now in place to
launch national procedures to endorse a 10 billion euro bailout
fund loan for Cyprus.
Silver was down 4.5 percent at $26.35 an ounce. Spot
palladium was down 2.6 percent at $709.22, while spot
platinum was down 2.5 percent at $1,493.24 an ounce.
($1 = 0.7618 euros)
(Editing by Veronica Brown, Jane Baird and; Phil Berelowitz)