NEW YORK—The price of gold has been dropping lately, with gold futures settling at their lowest prices in more than seven weeks, last Friday.
Gold futures with February delivery date fell 1.9 percent, to $1,360.50 per ounce on the Comex in New York on Jan. 14., the lowest price since last November. The price of gold has fallen 4.4 percent since the beginning of 2011.
The recent slump in gold prices is the longest for over a year.
Gold has been a haven for investors, as it is viewed as a stable investment as investors’ risk-appetite for stocks wane. It has enjoyed a good run over the last two years as investors feared about the global economy dipping back into recession.
Gold is also typically viewed as a hedge against inflation, and the high debt load and increased deficit run by many governments around the world have caused investors to pump more cash into gold.
China’s move last week to increase interest rates was viewed by analysts as a way to combat inflationary fears across the East Asian region.
Most of gold investments are tied up in exchange-traded funds (ETFs). The most popular gold ETF, SPDR Gold Trust (NYSE: GLD), has lost 4.3 percent of its value since Jan. 3.
“The most reliable long-term driver of the metal’s prices over recent years has been the trend in gold ETF holdings,” said a DailyFX report on gold ETFs. “This suffered a major set-back last week, with the Bloomberg gauge of total known holdings snapping the rising trend carved out through the fourth quarter of last year to drop to the lowest since mid-September.”
Oil, copper, and other commodities rose last Friday, despite gold prices’ fall. This signals that investors have little doubt of economic recovery.