The price of gold took a drastic plunge over the past few weeks. The price of gold hit an all-time high touching off of the $1900 per ounce mark a little more than a month earlier, and now, is trying to climb out of the low 1600s.
The price of gold shed over $300 or just under 16% in the month of September as the world watched the European economy come back under scrutiny and growth in America halt or reverse in some markets. So what does that mean for the price of gold?
Well some would say that if growth is down and interest rates are near 0% that the chance for deflation remains extremely high. Deflation has long been the enemy of precious metals like gold and silver.
However, both Europe and the US governments have made mention that to combat the slowing economies they will most likely take measures to boost growth by pumping money into the system once again, in some way or another. What that means is a potential to stem deflation or create inflationary pressures.
Inflation again, helps precious metals gain in price.
That could be some of the $25 price move we’re observing today with the price of gold. The sell-off profit taking and worrisome pressures have been stemmed by manufacturing numbers coming back higher and governments vowing to, well, inflate the economies.