Gold Price: Unprecedented Move in 30 Years

Last week, gold suffered its biggest one day drop in percentage terms for 30 years on Monday, April 15.  It touched a two-year low of $1,321 per ounce during the following session (i.e. on Tuesday, April 16).

By the end of the week, gold regained the $1,400 mark, but was still down about $100 over the week.

What does this mean? 

I will venture to guess that we will see further price declines in gold. Alongside of this, we will see further strengthening of the US dollar as a safe haven currency. Furthermore, the decline in the gold price may be the harbinger of substantial drops in US equity markets ...


Updated on June 21, 2013.

Yesterday, gold fell more than 4% to a 2.5-year low of $1285.90 per ounce. (The April 15 drop which was reported above had been under 9%.)

Yesterday's drop occurred one day after the US Federal Reserve signaled a scaling back of its monetary stimulus program, on which day gold also dropped.

Joni Teves, UBS precious metals analyst, provided the following explanation for the price slide: slowing Fed asset purchases with the end now potentially in site, higher yields, a stronger dollar and continued improvements in the economy, coupled with an already very weak investor sentiment.

UBS, a leading bullion bank, lowered its one-month target to $1,250 from $1,425 and its three-month forecast to $1,350 from $1,500.

As reported in the Financial Times on June 21, 2013 on page 20.

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