Metals and energy sank, sending a gauge of commodities to an eight-month low and extending a slump that Citigroup Inc. said may mark the “death bell” for the four-year rally in materials. The Standard & Poor’s 500 Index fell from a record as retail sales and consumer confidence slid.
The S&P/GSCI Index tumbled 1.3% to the lowest level since July. Gold futures plunged as much as 5.3% to trade below $1,500 for the first time since 2011 and enter a bear market, amid speculation Cyprus will sell reserves to raise cash. The S&P 500 Index slipped 0.3%, while emerging market technology stocks fell the most since August after Infosys Ltd.’s sales forecast missed estimates. The 10-year Treasury note yield lost seven basis points to 1.72%, while the dollar strengthened versus 10 of 16 major peers.
U.S. retail sales fell in March by the most in nine months, Commerce Department figures showed, and the Thomson Reuters/University of Michigan preliminary index of consumer sentiment sank to the lowest level since July. European stocks and the euro fell earlier as the currency bloc’s finance ministers prepared to meet. Citigroup analysts said there will be “many more losers than winners” for commodities this quarter and most industrial and precious metals will decline.
“It’s partly driven by a number of investors who have come to he conclusion that it’s not attractive to be in commodities, especially with what’s going on in the stock market,” said Jesper Dannesboe, senior commodity strategist at Societe Generale SA in London. “When people see gold going down, that might have reinforced selling in other commodities. We think it’s overdone in base metals, in oil, because the global economy is recovering. In gold, this is the beginning of the bear market.”
Fourteen of the 24 commodities tracked by the S&P GSCI Index retreated as the gauge extended its retreat since Feb. 14 to 8.3%. Gold is down more than 21% from a record settlement of $1,891.90 in August 2011, meeting the common definition of a bear market.
West Texas Intermediate oil for May delivery fell 2.4% to a one-month low of $91.29 a barrel and Brent crude for May settlement slid 1.2% to $103.06 a barrel on the London-based ICE Futures Europe exchange. The International Energy Agency yesterday reduced its estimates for global oil demand.
European Central Bank President Mario Draghi said the profits of any gold sales by the Cypriot central bank must be used to cover losses it may sustain from emergency loans to Cypriot commercial banks. European creditors today left a possible gold sale in the hands of the Cypriot central bank, which manages 13.9 metric tons of the metal, according to the World Gold Council.