Metals Stocks: Gold falls 1% as stocks, oil drop sharply

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By Claudia Assis
, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures fell Tuesday, stumbling 1% as equities and oil sold off, cutting down on investors’ appetite for precious metals.

Gold for June delivery
/quotes/comstock/21e!f:gcm11
(GCM11
1,451,
-17.60,
-1.20%)


 declined $15.90, or 1.1%, to $1,452.40 an ounce on the Comex division of the New York Mercantile Exchange. It had traded as low as $1,445 an ounce.

Japan crisis at Chernobyl level

Japanese officials raised their nuclear-crisis level to that of Chernobyl. Yumiko Ono reports.

The metal pared its losses in early floor trading, but the attempt at a comeback evaporated as losses mounted for oil and U.S. equities

“The pullback in oil has helped undermine precious metals,” said Jim Steel, a commodities analyst with HSBC in New York.

The sharp drop for oil muted inflation concerns, he added. In addition, several economists have slashed their forecasts for U.S. growth, which diminishes appetite for commodities as a whole, Steel said.

Crude futures stumbled more than 3% Tuesday after weak trade data led to a rash of pessimistic views on U.S. economic growth and renewed doubts about oil demand.

In addition, profit-taking that began on Monday also hit gold. The metal reached a string of record highs last week as the dollar tanked. Gold’s correction is likely to continue in the short term, analysts at Commerzbank said in a note to clients.

“The medium- to long-term positive outlook is still intact, especially for gold,” they added. “Gold should remain in demand as a safe haven in any case and the price should be well supported. Speculators and jewelry traders are likely to see lower prices as an attractive buying opportunity.”

Silver retreated from a 31-year high on the previous session. The May contract
/quotes/comstock/21e!f1:sik11
(SIK11
3,984,
-77.20,
-1.90%)


 slipped 70 cents, or 1.8%, to $39.89 an ounce.

Modest weakness in the dollar took out some of the sting. The dollar index
/quotes/comstock/11j!i:dxy0
(DXY
74.86,
-0.20,
-0.26%)


, which compares the U.S. unit to a basket of six currencies, traded at 74.974, compared with 74.989 in late North American trading Monday.

A weaker dollar is beneficial for commodities as it makes them less expensive to holders of other currencies and broadens their investment appeal.

U.S. stocks fell after Alcoa Inc.
/quotes/comstock/13*!aa/quotes/nls/aa
(AA
16.62,
-1.15,
-6.47%)


, a component of the Dow Jones Industrial Average
/quotes/comstock/10w!i:dji/delayed
(DJIA
12,266,
-115.19,
-0.93%)


, reported disappointing first-quarter revenue, casting an early pall over earnings season.

Meanwhile, Japanese authorities raised their assessment of the country’s nuclear crisis to 7, the same level as the 1986 Chernobyl disaster and the highest on an international nuclear-disaster scale.

They added, however, that radiation leaking from the crippled Fukushima Daiichi plant is only 10% of that released in Chernobyl.

Read more about Japan’s nuclear-crisis upgrade.


/quotes/comstock/21e!f:gcm11

Gold – 100 Oz (Comex) (GCM11)



$
1,451


Change
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Volume
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SILVER 5000 MAY1 (SIK11)



3,984
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US Dollar Index Future… (DXY)




74.86


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Alcoa Inc (AA)



$
16.62


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52.82m
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Dow Jones Industrial Average (DJIA)




12,266


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Claudia Assis is a San Francisco-based reporter for MarketWatch.



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