Gold Extends Bear-market Losses as Investors Reduce ETP Holdings

Gold, which plunged into a bear market last week, extended losses to the lowest level since May 2011 on expectations that demand for haven assets will contract as the global economy improves.

Gold for immediate delivery dropped as much as 0.3 percent $1,478.20 an ounce and was little changed at $1,484.02 at 9:12 a.m. in Singapore. Prices slumped 5 percent on April 12, taking losses to more than 20 percent since the record close in 2011, and meeting the common definition of a bear market.

Bullion has plunged 11 percent in 2013, after a run of 12 annual gains, as data showed that the global economy was improving, prompting investors to sell holdings in exchange- traded products at a record pace. The turn in the gold cycle is quickening and investors should sell the metal, Goldman Sachs Group Inc. said in an April 10 note.

“The demise of gold is still at an early stage,” Georgette Boele, a commodities strategist at ABN Amro Group NV, wrote in a note today. “Other assets will become increasingly more attractive as the growth outlook improves.”

Gold for June delivery fell as much as 1.6 percent to $1,476.90 an ounce on the Comex in New York, and traded at $1,483.40. Futures slumped to $1,476 on April 12, the lowest level since May 2011, as Cyprus may sell its gold holdings to cover possible losses from emergency loans.

The news from Cyprus “weighed on the gold price, on the view that other peripheral central banks - with much larger gold holdings - will go the same way,” Boele wrote. “Needless to say, there is little evidence of this.”

(Source: Bloomberg)