By STEVE ROTHWELL
FILE -In this Tuesday Oct. 9, 2012 file photo, a technician prepares 1 Kg gold bars of 995.0 purity to pack for delivery at the Emirates Gold company in Dubai, United Arab Emirates. As of Monday, April 15, 2013, gold has plunged more than 10 percent the last two days, suggesting that a decade-long surge in the metal is over. Signs that the U.S. economy is healthier are diminishing gold’s appeal as an safe place to invest money. Gold peaked at $1,900 in August 2011 and is now at $1,390. (AP Photo/Kamran Jebreili, File)
NEW YORK (AP) — Gold plummeted to its lowest level in more than two years as traders rushed to sell their holdings following a big price drop on Friday.
The precious metal has plunged almost $200 over the past two days and is trading below $1,400 an ounce for the first time since February 2011.
The sell-off started Friday when the U.S. government reported that wholesale prices fell in March by the most in 10 months. Investors had been buying gold in anticipation of a pickup in inflation. With prices now falling, the attraction of the metal as an alternative investment has waned.
The gold market was also rattled by a proposal last week that Cyprus sell some of its gold reserves to support its banks. Traders worry that Spain, Italy and other weak European countries might follow suit, flooding the market with excess supply just as demand for the metal is weakening.
“This is panic, this it isn’t organized at all,” said Phil Streible, a senior commodities broker at RJ O’Brien Futures. “If you look at Italy or Spain….if they start liquidating, that’s when you get serious movements.”
The price of gold plunged $120, or 8 percent, to $1,381 an ounce as of noon EDT Monday. The price of the metal has dropped almost 12 percent in the last two days. Gold peaked at $1,900 an ounce in September 2011 during the market turmoil that followed a downgrade to the U.S. government’s credit rating.
Gold has been declining from a recent high of $1,792 on Oct. 4 as the outlook for the U.S. economy improved, diminishing the metal’s appeal as a safe haven investment.
Some Federal Reserve officials have also been calling for an early end to the central bank’s bond-buying program. If that happens, it would likely cause U.S. interest rates to rise, resulting in an appreciation of the U.S. dollar. That gives traders another reason to sell gold, since they see the metal as an alternative to holding dollars.
Industrial metals also fell after China reported that economic growth slowed unexpectedly in the first three months of the year. The world’s second-largest economy grew by 7.7 percent over a year earlier, slowing from the previous quarter, and short of many private sector forecasts that growth would accelerate slightly to 8 percent.
Copper, which tends to follow the outlook for global growth, dropped 12 cents, or 3.5 percent, to $3.23 a pound.
Silver plunged $2.95, or 11.2 percent, to $23.36 an ounce. Palladium dropped $43.05, or 6.1 percent, to $655.70 an ounce and platinum dropped $72.70, or 4.9 percent, to $1,423.40.
The price of oil dropped nearly $3, or 3 percent, to $88 a barrel on Monday, its lowest level since mid-December. The slowdown in China’s growth added to doubts about the strength of global demand for crude
