The WSJ reports,"Gold prices fell below $1,300 an ounce Tuesday as worries about weaker demand for physical gold in China triggered a selloff across precious metals.
Gold for June delivery, the most actively traded contract, dropped $33.30, or 2.5%, at $1,294.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Gold is on track for its biggest one-day loss in percentage terms since Dec. 19.
Silver futures also posted steep declines. Silver for May delivery, the most active contract, fell 58.5 cents, or 2.9%, at $19.425 a troy ounce on the Comex".
Gold prices erased a week's worth of gains after data showed China's money-supply growth was lower than expected in March, intensifying investor fears that a slowing economy will weigh on the country's demand for gold.
Despite robust credit growth, China reported lower-than-expected money-supply growth in March. At the end of the month, the broad M2 measure of money supply was up 12.1% from a year earlier, short of the median 13% increase forecast by the economists and February's 13.3% rise.
Citigroup economist Ding Shuang said the slower growth in money supply was a result of the central bank's open-market operations, which brought a net withdrawal of liquidity in March.
"But I don't think that's a signal of monetary-policy tightening," Mr. Ding said. "On the contrary, I think the below-target M2 could offer more room for loosening by the central bank in the months ahead."
China's central bank is expected to conduct more open-market operations in the following months to inject liquidity into the domestic market, said Mr. Ding.
