Gold set for worst quarter in 45 years; copper, oil hit too
SINGAPORE (June 28) Gold traded near its lowest in almost three years on Friday, on track for its worst quarterly performance since at least 1968, as worries that the United States will wind down its stimulus punctured confidence in the metal as an inflation hedge.
Commodities have been hammered over the past three months by concerns that the era of cheap US central bank money is coming to an end as the world's top economy improves, with oil also heading for its weakest quarter in a year and copper looking at its deepest quarterly loss in nearly two years.
The fears have hit gold prices the hardest as funds ditched the metal and physical buyers sat out the rout as bets grew prices could decline further.
"From July onwards, commodity prices should remain softer for two key reasons. One is while timing may be variable, the impetus is for the US to reduce stimulus not increase it," said Vishnu Varathan, market economist at Mizuho Corporate Bank.
"And while there are bright spots in the US economy which is a reason for reducing stimulus, I don't think global growth factors have broadened enough for us to see the kind of synchronised upturn in growth with China, euro zone and the rest following in a very convincing way."
Spot gold hit a session low of $1,180.71 an ounce, its cheapest since August 2010. By 0634 GMT, it traded at $1,206, up half a per cent.
The price of bullion has fallen by as much as 15 per cent since last week after Federal Reserve Chairman Ben Bernanke signaled the central bank may reduce its $85-billion monthly bond purchases later this year and that the program may be ended altogether by mid-2014, if the economy improves as expected.
For the quarter, gold is down by nearly 25 per cent, its sharpest quarterly drop on record, based on Reuters data that dates back to 1968. That puts it on course for its first annual fall after a 12-year rally.
COPPER HIT BY SLOWER CHINA GROWTH
"The list of negative factors for gold has grown in recent months, not least growing investor disillusionment, and this sets the scene for what could develop into a multi-year bear marketfor gold, an occurrence that earlier this year we had only forecast to emerge in 2014," said metals consultancy GFMS.
Copper is heading for its steepest quarterly drop since July-September 2011, also depressed by concerns over slower growth in top consumer China.
Three-month copper on the London Metal Exchange was steady at $6,730 a tonne, but was down almost 11 per cent for the quarter, its third quarterly loss in a row.
"In terms of copper demand we're entering a season of relative softness in China. From the China side I see copper more likely to soften sequentially rather than strengthen," saidBarclays Capital analyst Sijin Cheng.
Brent crude was similarly subdued, little changed at just below $103 a barrel, but is also headed for its third straight quarter of decline. The contract for August delivery is down 6.4 per cent so far for April-June.
