Gold prices seem to have lost their bottom, with prices falling $112 per ounce in 10 or so days, landing at $1,555 per ounce.
Yesterday, nicknamed ‘Day of Doom’ by gold analysts saw gold prices plummet $45 in a single session, from $1,604 per ounce to $1,559/oz at the day’s close.
After-hours trading saw a further $4 chiselled off the gold price, and yellow metal fell to its lowest in about eight months.
So, what happened?
That’s a valid question, one that needs just a little bit of perspective. (Read: Revealed: Your pot of gold’s ‘sell-by’ date, after which it'll be trash).
That’s the long term perspective, though. Yesterday, the minutes of US Federal Reserve’s Open Market Committee that was held in early January were released. The market already knew that the meeting had suggested earlier that economic conditions in the US were improving, and that the quantitative easing programme, which pumps in the billions that prep up commodity prices, may need to be changed.
Yesterday’s minutes only confirmed the market’s fears, but not before technical selling started pushing down the prices even before the minutes became public.
That the prices started moving before the minutes were made public says something about gold investors’ confidence (rather, lack of) in the yellow metal at this point. They don’t expect it to do wonders in the short term – and no one but the most ardent of gold buffs expect it to remain above $1,400/oz in the long term.
The same story is being repeated in silver, a.k.a. gold’s shadow-boxer, which saw prices drop from $30/oz on February 11 to $28.41/oz at present – a decline of 5.6 per cent in 10 days.