🚗 🚙 Turn your trusty old car into trustworthy journalism Learn more

Gold prices fall 10% as need for ‘safe haven’ fades

Stephen Beard Apr 15, 2013
HTML EMBED:
COPY

Gold prices fall 10% as need for ‘safe haven’ fades

Stephen Beard Apr 15, 2013
HTML EMBED:
COPY

China’s economy — the world’s second largest — has slowed  from an annual growth rate of  7.9 percent  to 7.7 percent. Meanwhile India’s inflation rate has declined to a three year low of 6 percent. These figures have been partly reflected in the plummeting price of gold — a traditional hedge against inflation. 

After a dazzling rise to more than $1,900 an ounce, the yellow metal has clearly lost its luster. The price of bullion has slumped by 10 percent since the end of last week, down to $1,420 an ounce. 

“It’s not just gold,” says Julia Coronado, chief economist at BNP Paribas. “Commodity prices, like oil, are falling and other investments that are tied to inflation.”

Gold had been driven up by fears that money printing by central banks would devalue paper currencies. But China’s slowing growth and India’s cooling inflation rate suggest otherwise. A falling price of gold might suggest that inflationary fears are abating.

Rupert Nathan, metal analyst at the financial website Fat Prophets, thinks the price of bullion could have further to fall, but he doesn’t believe it will fall through the floor. He says that Japan has just embarked on a major round of money printing. And there’s enough political tension over North Korea to underpin bullion as the ultimate safe haven.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.