(The Canadian Press) TORONTO _ Gold prices plunged again Monday, accelerating a months-long trend and taking the glitter off investments in both bullion and the miners who produce it.
On the New York Mercantile Exchange, June gold futures were down $140.50 at US$1,360.90 an ounce in morning trading after a $63 drop on Friday.
The massive drop in bullion prices came amid a general meltdown for commodities such as oil and copper following data that showed weaker that expected economic growth in China.
Commenting on the ``collapse'' of gold prices, Scotiabank chief foreign currency strategist Camilla Sutton said in a commentary that the day's focus was likely to be on developments in the gold market ``with worries of forced liquidations a concern for markets.''
``Gold has fallen over 10 per cent over the last two sessions sparking fears of massing margin calls,'' Sutton said.
``Potential European central bank selling combined with two major banks issuing sell recommendations last week seem to have sparked the sell-off.''
Sutton was referring to speculation that Cyprus may sell a chunk of gold reserves to finance its part of its financial rescue.
Though that may not materialize, it was enough to prompt some investors to think that a gold-selling strategy may be used elsewhere in the troubled eurozone.
The drop in bullion was quickly reflected by gold stocks, with some well-known names again trading sharply lower after big declines last week.
Barrick Gold Corp. (TSX: T.ABX, Stock Forum) was down $2.12, or 9.24 per cent, in early trading at $20.82 after a couple of similar-sized slides last week. Heavy early volume of more than two million shares made it the most active issue on the Toronto Stock Exchange.
Right behind Barrick as the second most active issue was Kinross Gold Corp. (TSX: T.K, Stock Forum) (NYSE: KGC, Stock Forum), down 8.27 per cent or 53 cents at $5.88 on more than 1.7 million shares.
Other gold issues were also trading heavily, and in the red, with B2Gold Corp (TSX: T.BTO, Stock Forum) down a whopping 13.46 per cent at $2.25 share on volume of more than 1.3 million shares.
Goldcorp Inc. (TSX: T.G, Stock Forum), which has taken over from Barrick as the leading gold miner by market capitalization as its stock has been less severely punished in the recent slide, was still down 5.19 per cent Monday at $28.51. That reduced its market capitalization to $22.96 billion from $24.4 billion on Friday.
Another reason for the drop in gold put forward was that the U.S. Federal Reserve will outline a strategy to withdraw its monetary stimulus later this year despite recent mixed signals out of the U.S. economy, the world's largest.
One of the reasons why the price of gold has been so strong in recent years has been a direct result of the Fed's policy _ the new dollars created under so-called quantitative easing have found themselves recycled in financial markets and many of them have gone to the perceived haven of gold.
``Investors are clearly turning away from gold here, using the price action as justification for unwinding positions and taking capital away from what was once considered as almost a one-way bet,'' said David White, a trader at Spreadex.
``Even those naturally contrarian are struggling to find reasons to own gold,'' White said.
Goldman Sachs, last week lowered its average gold price forecast for 2013 to US$1,545 an ounce, although it fell well below that level in Friday's rout. .
Bullion, after hitting all-time highs near US$1,900 an ounce in August 2011, has since trended lower, with the decline accelerating since the new year.
_ With files from The Associated Press