Gold has Fallen Close to 30% in 2013

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.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza