The free fall in the price of gold accelerated Monday, extending to more than 20 percent decline in value that began last October. Analysts expect more of the same this week.
The price of gold in early New York trading was $1,420.50 per troy ounce. That’s down more than 9 percent from the price it had last Thursday, $1,564.90, and down from the $1,802.60 it closed at Oct. 4, 2012. In the first few hours of trading Monday, the price of gold fell more than 5 percent from the Friday closing price of $1,501.40.
“There is no other way to put gold’s recent sell-off: nasty,” UBS analyst Joni Teves said.
“And the breach of the key support at $1,526 damaged market confidence dearly. In fact, the entire precious metals space was thick with the air of negativity on Friday, so much so that gold did not even blink on soft U.S. economic data. Gold ETF holders sold 680,000 ounces ahead of the weekend, the bulk of which came from the GLD fund.”
Analysts said the free fall may continue until Asian demand picks up.
"The key question here is whether demand from China will continue to respond to the same magnitude it did in February and whether Indian buying buffers prices amid its seasonally strong period for consumption," said Suki Cooper of Barclays.
Last week two major financial institutions, Societe Generale and Goldman Sachs, recommended clients make bets that the price of gold would fall.
“Given gold’s recent lackluster price action and our economists’ expectations that the acceleration in U.S. growth later this year to above-trend pace will support U.S. real rates, we are lowering our USD-denominated gold price forecast once again,” Goldman Sachs said in a note that forecast gold falling to $1,450 per ounce this year and $1,270 next year.
Mike Obel assigns, edits and writes stories about business, markets, finance and economics. Before coming to International Business Times, he worked on the Finance Desk of...