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COMMODITIES-Bruised by bleak China data, Fed policy plan
June 20, 2013 / 10:34 AM / 4 years ago

COMMODITIES-Bruised by bleak China data, Fed policy plan

* Gold plunges to lowest in 33 months

* Oil slips more than $2, biggest daily drop in more than a month

* China June flash HSBC PMI hits 9-month low

* Coming up: U.S. existing home sales May; 1400 GMT

By Lewa Pardomuan

SINGAPORE, June 20 (Reuters) - Commodities fell sharply on Thursday as further evidence of slowing growth in economic powerhouse China added to a selloff triggered by the U.S. Federal Reserve’s explicit signal it will start scaling back its stimulus later this year.

Gold sank to its weakest since September 2010 as the Fed Chairman Ben Bernanke’s surprisingly strong commitment to end the central bank’s asset-buying by the middle of 2014 dented bullion’s appeal as a hedge against inflation.

Oil slid by the most in more than a month and copper plunged to a 7-week low with weak manufacturing data from key consumer China muddying the outlook for demand and prompting investors already shaken by the Fed’s stance to rush for the exits.

“Once the U.S. Federal Reserve starts to taper the asset purchases, we are likely to see a stronger U.S. dollar. Commodities which are priced in the dollar will tend to weaken in this kind of environment,” said Lee Chen Hoay, investment analyst at Phillip Futures in Singapore.

“The PMI manufacturing is on the downside. With China being the second most important consumer for oil, the demand prospect doesn’t look good.”

Oil prices dropped more than $2, extending losses from early trade after data showed activity in China’s manufacturing sector weakened in June to a 9-month low as new orders faltered, reinforcing signs of tepid growth in the second quarter in the world’s No.2 economy.

China’s economy grew at its slowest pace for 13 years in 2012 and so far this year economic data has disappointed, bringing warnings from some analysts that the country could miss its growth target of 7.5 percent for the year.

Bleak China data dented London copper which fell to its lowest since early May at $6,802.75 a tonne.

In grains, U.S. wheat slipped more than 1 percent to track the broad-based commodity sell-off and a firming dollar. Corn fell, having touched a two-week high on Wednesday, while soybeans also slid. (Editing by Himani Sarkar)

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