Triggered by heavy selling in Asian markets.
By Raif Karerat
WASHINGTON, DC: Gold, the metal that has long been considered a stable haven during tough financial times, plunged to its lowest price levels in five years after being triggered by heavy selling in Asian markets over Sunday night.
By 9:15 a.m. ET on Monday, the metal was down about 2 percent at $1,110 per ounce, having dived below $1,100 — a level not seen since 2010, according to CNN Money.
According to USA Today:
The sharp decline in gold prices is being driven in large part by an improving U.S. economy. Stronger growth in the U.S. not only takes away some of the luster of gold’s reputation as a defensive play in tough times but also points toward the Federal Reserve hiking interest rates later this year, which also hurts the story for gold as higher rates dents inflation. Gold, a hard asset, is viewed as a hedge, or protection, from runaway inflation.
“A combination of factors that include low inflation, modest wage growth, low interest rates and a strong dollar don’t favor gold at this time,” John Stoltzfus, chief investment strategist at Oppenheimer.
Gold prices in India dipped further on Monday to below Rs. 25,000 (about $393) per 10 grams — the lowest in two years, according to India Today.
“It is expected there will be huge demand in a day or two,” said Rahul Gupta, director of the Delhi-based PP Jewellers, told the Indo-Asian News Service. “The situation is almost like that of April 2013 when the price dipped to Rs 25,500 per 10 grams and the demand surged overnight.”
1 Comment
Whoever believes that gold is an hedge against inflation needs to have their head examined. Gold is a dead asset except when owned as jewelry and passed down to mothers to their daughters or daughter in law. Hording gold takes the currency out of circulation that should have been otherwise put to good use for building infrastructure. Also there will never be a gold standard.