Gold drops below $1,400 an ounce

Michael Allan McCrae | May 15, 2013 | 2:52 pm Precious Metals Gold Silver

Hedge fund positioning shows why gold price rally fizzled

A sharp drop in gold hit miners and the Canadian markets, while the US markets shrugged off weak manufacturing data.

Spot gold dropped 1.98% to $1,398 per ounce, a 30-day low. Silver is at $22.67 an ounce, having lost 4.01%.

Gold miners fell. Barrick Gold (NYSE:ABX) was down 2.83% to $19.92. The company’s 52-week low is $17.15.

Goldcorp (NYSE:GG) declined 3.65% to $27.65, just above its 52-week low of $27.11.

Tough gold prices were bad for the Canadian markets. The S&P/TSX Composite index was down 0.72% to 12,486.18.

The Dow Jones opened down but recovered by mid-morning to 15,208.51, just 0.04% off yesterday’s close. The S&P 500 also gained traction at 1,649.01.

The markets may be betting on some stimulus after weak manufacturing numbers. The Bureau of Labor Statistics released its producer price index, which measures how much various industries are able to charge for their wares. The PPI showed a sharp overall decrease of 0.7 percent in April.

Notable in the numbers was the reversal for miners.

In April prices for commodities less energy decreased 2.8 percent. Accounting for more than one-third of the monthly decline in April, nonferrous metals prices moved down 2.6 percent.