Global Data Dooms Gold

Published on Thursday, 22 March 2012 19:55 Written by Todd Shriber

New York, March 22^nd (TradersHuddle.com) – Gold’s status as a safe haven investment in 2012 is now a distant memory in 2012. That much was reiterated on Thursday when another batch of concerning economic data out of China helped contribute to another down day for gold and other precious metals. Following news that the preliminary March reading for China’s PMI fell to 48.1 from 49.6 in February, Comex gold slid $7.80, or 0.5%, to $1,642.50 an ounce. That’s the lowest settlement price in nine weeks. The dollar remained a safe haven as the PowerShares DB US Dollar Index Bullish (NYSE: UUP) added 0.1% but on very light volume.

China’s slack economic data overshadowed good news here in the U.S. and served as a reminder that a hard landing in China will be bad news for natural resources-related trades, gold included. China is the world’s second-largest consumer of oil and gold. Gold’s recent decline has analysts and traders worrying that the technical support at $1,625 an ounce will be tested, and if that level is violated, the ensuing sell off could be bloody.

The SPDR Gold Shares (NYSE: GLD) lost 0.4% while the iShares Gold Trust (NYSE: IAU) was off 0.37%. Other precious metals were just as weak if not weak. The iShares Silver Trust (NYSE: SLV) tumbled almost 2.2% on volume that was almost 15% above the daily average. SLV’s chart is weak and appears to be screaming that a return to the $24-$25 area is in the cards.

Bad news from China is almost always bad news for copper and exactly that's what we saw today as the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC) lost almost 2% on volume that was nearly triple the daily average. The Global X Copper Miners ETF (NYSE: COPX) plunged almost 3% while Freeport McMoRan (NYSE: FCX) shed 3.7% on volume that was well above the daily average. By comparison, the iShares MSCI Chile Investable Market Index Fund (NYSE: ECH) looked good with a loss 1.4% on thin turnover.

We’ve been wondering when the ETFS Physical Platinum Shares (NYSE: PPLT) would be turning, and it looks like that glum situation arrived today. PPLT dropped 1.2%, trading below its 50- and 200-day moving averages. As of Tuesday, PPLT had seen a $16.5 million dollar outflow over the past week, according to data from ETF Channel.

Turnout the lights, the party may be over for the ETFS Physical Palladium Shares (NYSE: PALL). At least for now. PALL tumbled almost 5% today on volume that was more than 50% above the daily average. If $60 doesn’t act as support, PALL could easily go back to $55. The marquee mining funds closed lower as well, and it appears to be just a matter before the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) hits a new 52-week low.