Gold declines with brent below US$50

[WELLINGTON] Gold extended losses into a second day and crude oil remained below US$50 a barrel amid concern over slackening demand for commodities and the outlook for US interest rates. Asian energy and mining stocks fell, while Australia's dollar dropped before a monetary policy review.

Bullion lost 0.5 per cent to US$1,081.55 an ounce by 10:16 am in Tokyo, as palladium slid to a 13-year low and platinum sank 1.6 per cent. Copper also retreated, falling a fourth day with Brent oil at US$49.86 following Monday's 5.2 per cent tumble. While its energy and materials industry groups fell at least 0.4 per cent, the MSCI Asia Pacific Index fluctuated as Japanese shares pared back declines. The Aussie hovered near its weakest level since 2009 and the Korean won resumed its downward move.

Angst over China's slowing economy and concern over supply gluts in oil to industrial metals have reverberated through the market, with the ascendant dollar also helping send a gauge of commodity prices to its lowest level in 13 years. Meanwhile, investors are scrutinizing US data for clues to the timing of the first rate increase since 2006. China imposed limits on equity short selling after markets closed Monday, their latest salvo aimed at quelling equity volatility.

"Renewed Chinese growth concern is driving commodities and stock prices lower," Matthew Sherwood, head of investment strategy at Perpetual Ltd, which manages the equivalent of US$24 billion, wrote in an e-mail to clients.

"With earnings season concluding this week all eyes are likely to look back at the clouded macro picture where China and Greece remain problematic and the US Fed is likely to remain at the forefront of investors' concerns." Oil Smacked Palladium fell as much as 1.2 per cent to US$592.65 an ounce, the lowest level since October 2012, while platinum fell to US$947.85 per ounce. Copper fell 0.3 per cent to US$5,207 a metric ton in London, after touching a fresh six-year low in the previous session.

Brent inched up 0.7 per cent after its slump last session sent it to the lowest settlement price since January. West Texas Intermediate crude added 0.6 per cent to US$45.44 a barrel following a 4.1 per cent drop. Comments from Iran's oil minister ignited the oil rout Monday, with the country pledging an almost immediate increase in output once international sanctions are eased.

Bloomberg's commodity gauge slid 1.5 per cent to its lowest level since February 2002 on Monday, while other indexes of leading energy companies and mining stocks fell to multi-year lows. BHP Billiton Ltd, the world's biggest miner and Australia's largest oil producer, slipped 1.4 per cent in Sydney to its lowest level in a week.

BLOOMBERG