Gold Falls to Four-Month Low

Category: Gold / May 11, 2012 4:01PM EDT

Gold hit a four-month low today ... and it's now at the lowest point of the year ... about $1,584 per ounce. The last time it was that low was in December.

The reasons for the drop are legion. For one thing there's Greece and the likelihood that it's going to default on its sovereign debt ... and perhaps leave the euro zone. Gold also fell today because of nervousness over the fact that JP Morgan ... a well-regarded bank ... is facing billions in losses that came from questionable trading over just a few weeks.

Gold also took it on the chin today because of worries that the Chinese economy ... the second biggest in the world and the world's biggest gold miner ... is no longer growing as fast as it used to. The Chinese government said today that industrial output last month was weaker than expected.

Demand for gold from India ... which is the world's biggest buyer of physical gold ... is down and that means gold isn't getting the price support from buyers of physical gold like it usually does.

Add to all these factors the report today from the U.S. government that the producer price index ... which is a measure of inflation ... came in lower than expected. Inflation tends to raise the price of gold ... but since that not a problem right now gold isn't getting a lift from things like producer or consumer price indexes.

The upshot of all these negative factors was that investors sold commodities today and piled into safe havens. The price of Treasury's rose ... and the yield on those 10-year bonds fell to 1.84 percent.  German government bonds also got more expensive ... another reflection of the fear that's in the market.

It was a rough day for other commodities ... too. Crude oil traded down in New York to just over $96 per barrel.  And copper closed lower ... making it the second week in a row that the red metal has lost value.