Gold slumps in its worst two-day loss in 30 years

Gold slumped anew yesterday, racking up its worst two-day loss in 30 years, and investors dumped stocks and other commodities after weaker-than-expected Chinese data raised concerns about the global outlook.

Gold dragged other metals lower as its price plunged to a more than two-year low. Brent crude fell towards $100 a barrel, while on Wall St stocks were down more than 1%.

Spot gold dropped as much as 8% yesterday alone, falling as low as $1,355.80 an ounce. In the last two sessions gold has fallen over 12%, making for the worst two days since late February 1983.

Gold was recently at $1,365.66, down 7.7%.

Strategists have cited various reasons for gold’s decline, including plans from Cyprus to sell excess gold reserves and feared selling from other central banks. The sharp correction has caused short-term investors to flee the asset.

“The pressure from the proposed sale of Cyprus gold is one of the factors, and once one of them start, they all run from the hen house,” said Robert Richardson, senior account executive and trading officer at Canadian broker-dealer WD Latimer Co Ltd.

China’s recovery unexpectedly stumbled in the first three months of 2013, as it reported its annual growth rate eased to 7.7% from 7.9% in the final quarter of last year. Economists had forecast 8% growth.

Last week Cyprus revealed it would sell about €400m worth of gold to help shore up its ailing finances and the move has sparked suggestions that larger countries in the region could use the move to cash in on some huge jumps gold has seen over the last decade.

Traders also cited concern that the Federal Reserve might reduce US monetary stimulus towards the end of the year.

Brent crude futures dropped more than $2 to $100.30 a barrel as the disappointment stirred global recovery concerns. US crude also lost more than $2 to $88.72.

Silver was down 9.6% at $23.38 an ounce, having fallen to its lowest since Oct 2010 at $22.97.

US stocks also fell, putting the benchmark S&P 500 on track for its first two-day losing streak in a month.

“None of the economic data has been very good for the last couple of weeks. When you look at the whole scope of data, it looks like we have been going into a slowdown here,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

The Dow Jones industrial average dropped 265.86 to 14,599.20. The Standard & Poor’s 500 Index dropped 25.54 points, or 1.61%, to 1,563.31.

The Nasdaq Composite Index dropped 59.01 points, to 2,797.47.