Dash for cash: gold prices plunge

Spot gold prices sank $65 an ounce, or 3.75 per cent, in a single session to trade at $1,650/oz at 7.30am UAE time (3.30am GMT) on Tuesday as investors struggle to make sense of the fine-print coming out of the European Union decisions over the weekend.

Ratings agency Moody’s said the intergovernmental changes agreed upon by 26 of the 27 EU countries last week wasn’t ground breaking and that the countries’ ratings were still on the chopping block for a review in early 2012.

In response, stocks, gold and other precious metals took a simultaneous nosedive while the US dollar continued to sport fresh ‘safe haven’ whiskers.

Meanwhile, gold has lost a lot of its safe haven appeal in the past few months, with gold prices being as indecisive as a boss – from under $1,500 an ounce in the beginning of July, gold prices shot up to over $1,900/oz towards mid-August, then fell back to below $1,600/oz in the last week of September, only to shoot up to above $1,800/oz in November, and now back to $1,650 level as the year is coming ariund to a close in three weeks. 

Experts who earlier maintained that Eurozone troubles would reignite a flight to safety towards gold are confused on the yellow metal’s failure to lift off despite global equity markets tanking last week. 

However, the inverse relation between gold and the US dollar remains steady, with gold falling and rising in direct opposite correlation to the greenback.

Follow Emirates 24|7 on Google News.