Gold plunges to 2-year low on technical selling, China GDP weighs

Investing.com - Gold futures extended losses from the previous session to hit a two-year low on Monday, as the U.S. dollar strengthened after official data showed that Chinese first quarter economic growth came in below expectations.

Gold’s losses accelerated sharply after prices broke below key support levels close to the USD1,477 and then the USD1,440-level, triggering a flurry of automatic sell orders amid bearish chart signals.

Prices of the precious metal are down nearly 25% since hitting an all-time high of USD1,920.80 an ounce in September 2011, meeting the standard for a bear market.

Market analysts have warned that gold prices could fall to as low as USD1,400 a troy ounce in the near-term, it’s 200-week moving average.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,445.05 a troy ounce during late Asian trade, down 3.8% on the day.

Comex gold prices fell by as much as 4% earlier in the session to hit a daily low of USD1,426.95 a troy ounce, the weakest level since April 1, 2011.

Gold prices were likely to find support at USD1,412.50 a troy ounce, the low from April 1, 2011 and resistance at USD1,476.25, the high from April 11, 2011.

The Chinese economy expanded by 7.7% year-on-year in the three months to March, down from 7.9% in the fourth quarter and undershooting expectations for 8.0% growth.

Separate reports showed that Chinese industrial production also came in below expectations, while retail sales rose slightly more than fore

The precious metal extended sharp losses from the previous session, when it tumbled more than 5% as sentiment on the precious metal was dampened after minutes from the Federal Reserve’s most recent policy-setting meeting showed the central bank is considering ending its bond-buying program sooner-than-expected.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank could bring quantitative easing, one of the biggest boosts to gold’s bull run, to an end this year.

News that Cyprus was to sell “the excess amount of gold” it owned to raise an estimated EUR400 million for its bailout also weighed on sentiment.

Elsewhere on the Comex, silver for May delivery lost 6.5% to trade at USD24.63 a troy ounce, while copper for May delivery dropped 1.35% to trade at USD3.290 a pound.