The gold price slumped to its lowest for more than two years yesterday as fears over a major sell-off from institutional investors and central banks sent traders rushing out of the precious metal.
Gold – which hit more than $1,900 an ounce in September 2011 as the eurozone crisis intensified – is in bear market territory after sliding to $1,355 at one point.
The latest fall followed a 6.2 per cent slump in gold prices last week, the worst performance since December 2011. The precious metal previously enjoyed a decade-long rally but Goldman Sachs urged investors to short gold last week saying “conviction in holding gold is quickly waning”. Fears Cyprus could sell off reserves as part of its bailout and that the US Federal Reserve could wrap up money-printing efforts later this year have also undermined prices.
Spreadex trader David White said: “Gold grinds higher over several months but then it craters. Calling the bottom of this is a mug’s game.”