Gold prices fell below $1,200 an ounce Thursday and it hit their lowest levels since 2010.
Gold has tumbled nearly 30% in 2014. That’s the biggest drop since 1981, said Kevin DeMeritt, president of Lear Capital, a precious metals firm based in Los Angeles. It’s also the first year-over-year decline in gold prices since 2000, according to FactSet.
Investors have been selling gold futures and gold-backed ETFs this year as stocks have soared to record highs. Prices for physical gold, including bars and coins, have fared better thanks to demand from investors in China.
The rout follows a long-running bull market in gold. Even after this year’s losses, gold is still up nearly 350% since 2001, when it traded below $300 an ounce.
Gold hit a nominal (i.e. not adjusted for inflation) all-time high near $1,900 an ounce in 2011.
The latest slide comes one day after the Federal Reserve announced plans to cut back on, or taper, its bond buying program.
While it will be buying fewer bonds, the Fed also stressed that short-term interest rates will remain exceptionally low even after the unemployment rate falls to 6.5%. Investors took that as a sign the Fed will continue to flood the market with liquidity for years to come.
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