The price of December gold – the most actively traded contract – dropped by almost $80 to trade below $1,800 an ounce on Wednesday morning. By midday bullion had regained some of its footing but was still down just over 3% or $56.60, at 1,816/oz in New York as traders banked profits.
Gold has declined $120 in less than 24 hours after setting an intraday record of $1,923.10 an ounce on Tuesday. During August the metal added 12% as investors sought a safe haven from the slumping US economy and the continuing debt crisis in Europe.
Despite the losses many analysts believe gold will hit $2,000 an ounce soon as talk of another round of monetary stimulus or a direct injection into the economy as part of a jobs programme lead to more cheap money entering the financial markets.
MarketWatch quotes Matt Zeman, a senior market strategist at Kingsview Financial in Chicago: “Equities are sharply higher today, and Obama is coming on with his jobs address. We’ve seen a little but of a return of risk appetite, but not for long. I suspect buyers will come back bargain hunting again.”