Gold price drops to 6-month low amid currency confusion

The spot gold price closed at  $1,640 on Monday,  the lowest closing price since 21 August 2012.

Gold's latest retreat comes as G7 officials issue multiple – often contradictory – statements in an attempt to tackle the prospect of intensifying currency wars amid a G20 finance ministers and central bankers meeting in Moscow.

The G7 most highly industrialized nations – recently most notably Japan – are using monetary policy to become more competitive by devaluing their currencies.

The tactics employed by the US and others which include near-zero interest rates and asset purchases under quantitative easing  or QE programs have led to howls of protest from emerging markets like Brazil and retaliatory measures by China.

Observers are concerned about a 1930-style currency war which was set off by Britain leaving the gold standard in 1931.

Fiat currency depreciation increases gold's allure as a hedge against inflation and status as hard asset capable of storing wealth.

QE, in particular, has been a massive boon for gold – when the first round kicked off in the US on 16 December 2008 gold was worth $837.50.

But any change to central banks around the world flooding market with cheap money, is bad news for gold.

Gold is coming off a 12-year winning streak after a 7% annual gain in 2012, but has now fallen 4.8% below its price this time last year.