Gold price drops to two-year low

  • Gold prices fell to their lowest level in two years on Monday on the back of weak economic data out of China.

    The price of bullion was down 9.2 percent to $1,395 an ounce.

    The lower than expected growth in China's economy triggered a wider fall across commodities with oil prices plunging to four-month lows.

    Brent crude was down $2.29 to $100.75 a barrel.

    The price of copper and aluminium also dropped to levels not seen in a year and a half and three-and-a-half years respectively.

    The depreciation comes after China said that its economy grew by 7.7 percent in the first quarter of 2013, lower than forecasts and the pace of growth seen in recent years.

    According to analysts, the drop in the gold price was also affected by expectations that the U.S. central bank is set to tighten monetary policy by ending its quantitative easing program, which would subsequently lead to an decrease in the inflation rate.

    In addition, Cyprus's announcement last week that it was planning to sell a bulk of its gold reserves has also led to a fall in the price of gold.

    Gold hit a record $1,909 an ounce during trading on August 23, 2011.

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