Spot Gold Drop
Spot gold drop – below $1,100 a ounce.
With the large drop in the spot price of gold yesterday, many insiders believed, or hoped, that there would be a significant bounce back in the price at the start of gold trading this morning.
But, alas, sometimes reality does not accommodate wishful thinking.
So far this morning, the spot gold price has broken through the $1,100 per ounce many believed would be a bottom in this long decline in gold. As I’m writing this, you can see from the gold spot price chart above, gold is currently at $1093.48 an ounce.
Spot gold drop reasons:
The Greek debt crisis and the Iran nuclear treaty have made investors more optimistic about global economic prospects. Which means that fewer may use gold as a ‘safe haven’ for their money when they can get decent returns elsewhere.
Gold is traditionally used as a hedge against inflation. The idea is that it doesn’t gain value, but it doesn’t lose it either. If a government starts printing money and the value of the dollar decreases, gold should still be worth the same. But, now holding too much gold isn’t such a great idea.
With the federal reserve board assuring us that interest rates will rise soon, and the fact that gold offers no return except for potential appreciation, usually rising interest rates or anticipation of rising rates will be detrimental to the spot gold price.
So, are we at or near a bottom for the spot price of gold? Who can really accurately answer this question? Personally, with all that’s been happening in the world, the Iranian nuclear crisis, the Greek euro debacle and the looming Puerto Rico debt default, I would think in a normal gold market , the spot price of gold would be setting multi-year highs instead of our current multi-year lows!