Gold price falls as US economy shows promise

Gold has dropped to its lowest price since January, with the US economy showing signs of good economic growth the demand for protection of wealth has dropped.

In September gold fell by 7 percent. In 2013 bullion dropped by 28 percent as people predicted the Fed would reduce its asset purchases and the dollar has increased as economic data has been promising.

Gold fell by 0.4 percent to $1,210.94 at 10:28 a.m. in London. On Sept. 25 it fell to $1,207.04 – the lowest point since Jan. 2. It is forecast to drop by 8.8 percent this quarter.

UBS AG wrote in a report today that as gold prices near $1,200 an ounce there may be an increase in more physical demand.

In an email, Zhu Runyu, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage, told Bloomberg:

“The divergence in monetary policies between the Fed and other central banks will further push up the dollar and weigh on gold. As geopolitical tensions fade, gold has also lost a key price support this year.”

Gold has been commonly used as an investment vehicle in times of economic turmoil as a means of protection against currency volatility.

UBS wrote:

“There is a general expectation that prices close to or below $1,200 will draw a greater reaction from physical buyers and opportune investors. A rush to physical will not take hold, not unless prices fall closer to $1,100. Some thought further modest declines were possible, while others felt the market had found a bottom and should be supported around these levels.”

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