Update: Gold and Commodities Sell-Off

FYI – We are beginning to see some deflationary concerns sweep over the markets this morning, hitting commodities particularly hard. Traders are citing weak financial markets/economic data, a firmer dollar, pressure from a draft plan for Cyprus to sell bullion, and technical breaches for the sell-off.

The early-morning declines in precious metals have turned into a rout as gold entered bear market territory (down -21% from their mid-2011 highs), falling below $1,500/troy ounce for the first time since July 2011. Silver slumped as much as -6%, hitting its lowest price since November 2010. Even crude oil is feeling the pressure, falling -3.1% and nearing $90/barrel.

Also contributing to the pressure were comments moments ago from frequent dove Boston Fed President Eric Rosengren. He said he expects the economy will slowly improve as the year goes on, which would allow the central bank to taper asset purchases toward the end of the year. “My hope is the economy picks up and we can start removing the accommodation,” Rosengren said in an interview on CNBC. “And that is what is in my forecast, is that the economy is slowly improving and as we get towards the end of the year we’re be in a situation where we can remove the accommodation,” he said. Asked if he was concerned with some weak economic data for March, Rosengren said he detected strength in the underlying economy.

As of 11:35AM:

–          Gold off over $60/ounce (-4%), falling below $1,500/ounce for the first time since July 2011.

–          WTI Crude off -3% to the $90/barrel handle – losses largely tied to demand concerns, which were heightened after think-tanks this week lowered their consumption forecasts.

–          Base metals also weak, with copper down -2%.

–          Both the Euro and US Dollar relatively stable, with the broader equity indices off roughly -0.5%.

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