Gold dropped to below $1,700 an ounce as investors continue their broad sell off to cover other losses in the market. Escalating anxiety that Europe’s debt crisis will spark a global economic recession is making matters even worse, as there looks to be no place for investors to turn.
Gold was acting as a safe haven for most investor’s money, however most of these same investors have had to pull their money out of gold and use it to cover massive losses from the market. The past two days alone has seen the stock market tumble over 600 points.
The most actively traded gold contract, for December delivery, fell $55.20, or 3.2%, to $1,686.50 a troy ounce in early trade on the Comex division of the New York Mercantile Exchange. This was the first time the contract had traded below the psychological level of $1,700 in almost two months.
“The most important thing that all financial markets crave…is some sense that politicians are prepared to take bold policy decisions on the economies,” said Ross Norman, chief executive officer of London-based gold-bullion dealer Sharps Pixley.
Gold prices are continuing to crumble due to the fact that investors need to put out investment fire losses in other areas, as well as sell off their gold in favor of cold, hard cash, which we all know is always king.
Gold, which has been a safe haven from global political and economic uncertainty for much of this year, has suffered a big setback this week amid losses in many other asset classes. The current state of gold is a far cry from the projected $2,000 per ounce price range that many experts were predicting.
It should be interesting to see what happens with gold during the rest of 2011. When all is said and done, gold is still probably going to be a great investment. After all, it is still gold!