SAN FRANCISCO (MarketWatch) — Gold futures fell on Tuesday, moving in step with weakness in global stock markets and softer commodity prices, as concerns about a slowdown in China flared up.
Gold for April delivery /quotes/zigman/660065 GCJ2 +0.29% fell $20.30, or 1.2%, to end at $1,647 an ounce on the Comex division of the New York Mercantile Exchange.
Traders became nervous that top commodities consumer China may be due for a slowdown after comments from the president of BHP Billiton Ltd.’s /quotes/zigman/270355/quotes/nls/bhp BHP -3.31% /quotes/zigman/184879 UK:BLT -4.05% iron-ore division.
BHP’s Ian Ashby told reporters in Perth on Tuesday that China’s iron-ore demand is easing and that demand growth will slow to single digits. The news sent mining stocks lower in Asia and Europe and weighed on commodity prices across the board. Read more on BHP executive's comments
“Anything indicating that China is slowing is going to hit risk assets in general,” said Matt Zeman, a strategist at Kingsview Financial in Chicago. For the better part of last year, gold behaved more like a regular commodity, an asset class considered riskier, than as a safe-haven instrument, he added.
Some profit-taking after a rise Monday and a slightly stronger dollar on Tuesday also contributed to the downdraft, he said.
The next couple of sessions will be crucial to see whether gold will test the next level of support around $1,630 and $1,550 an ounce, Zeman said.
The dollar index /quotes/zigman/1652083 DXY -0.15% , which measures the U.S. unit against a basket of rivals, traded at 79.582, compared with 79.451 in late North American trading Monday.
Meanwhile, Indian jewelers have extended the first nationwide strike in seven years for two additional days, asking that the government cancel a new excise duty of 1% on nonbranded gold jewelry.
“This ‘strike,’ which the industry association claims has been joined by more than 90% of the country’s 300,000 gold jewelers, has now been ongoing for four days and looks set to continue,” said analysts at Commerzbank.
“An association meeting with the Indian finance minister, at which there were calls for the duties to be revoked, would appear to have produced no results,” they said. “This is likely to have a negative impact on demand, and therefore imports, at least for the time being, which could prevent any renewed climb in the price of gold.”
Holdings in gold-backed exchange-traded products have dropped for the first time in three weeks, the Commerzbank analysts said in a note.
“ETF investors sold holdings on a significant scale” on Monday, they said. “ETF investors, who are regarded as taking a longer-term view, are remaining loyal to gold despite yesterday’s outflows; unless there are inflows, however, the price is likely to gain little impetus from this side,” they said.
Among other metals, May silver futures /quotes/zigman/662452 SIK2 +1.02% fell $1.12, or 3.4%, to end at $31.83 per ounce.
Copper for the same month /quotes/zigman/660068 HGK2 +0.52% fell 8 cents, or 2%, to finish the day at $3.83 a pound.
April platinum futures /quotes/zigman/2304887 PLJ2 +0.28% fell $30.40, or 1.8%, to settle at $1,654.30 an ounce. Sister metal palladium for June delivery /quotes/zigman/2304937 PAM2 +0.14% fell $10.55, or 1.5%, to $697.05 an ounce.