http://www.ft.com/intl/cms/s/0/6055d326-a5ad-11e2-9b77-00144feabdc0.html#axzz2QaWgS6iUGold prices have suffered their sharpest fall since the 1980s, heightening fears among investors that the precious metal’s decade-long bull run has ended.
Spot gold prices tumbled by more than $100 an ounce, or 8.7 per cent, in a few hours on Monday amid a rout in metals markets, while silver fell 11 per cent. Faltering European demand and weaker than expected Chinese economic data depressed oil prices, pushing Brent crude down by 3 per cent to $100.02 a barrel, a nine-month low.
The S&P 500 recorded its worst session in six months, closing 2.3 per cent lower as energy and materials companies tumbled.
Gold’s drop since Friday to a two-year low of $1,355.80 a troy ounce is the sharpest two-day tumble since 1983, when the last gold bull market was unravelling. “This has really tested people’s resolve,” said David Rose, global head of metals trading at HSBC. “People who have said they want to be long are asking ‘How much do we really want gold to be part of our portfolios?’”
Gold has enjoyed a stellar run over the past decade. Prices surged more than sevenfold since 2001 to an all-time high of $1,920 a troy ounce in 2011, as investors turned to the metal as a haven from turmoil in the rest of the financial world.
But as fears over the eurozone debt crisis recede and investors bet on a recovery in the US, sentiment towards gold has suffered. Credit Suisse, Société Générale and Goldman Sachs have all called the end of the bull market in recent months.
“This is a market that has only got one thing on its mind: get me out [of gold],” said David Govett, head of precious metals at brokerage Marex Spectron.
The collapse in prices will hurt investors with large gold holdings such as John Paulson, the hedge fund manager who made billions betting against the US housing market during the financial crisis.
Topic: Gold hit by sharpest tumble in 30 years (Read 769 times)