The price of gold dropped to its lowest since August 2010 in overnight trading as the yellow metal looks set to post its worst quarter since at least 1968.
Gold fell to $1,191.21 an ounce in Asian trade before recovering as investors continue to assess the impact of the Federal Reserve’s eventual move to reduce the pace of its $85bn-a-month bond-buying programme.
The yellow metal has seen its price hit since the beginning of last week, dropping by around 15 per cent after Fed chairman Ben Bernanke said quantitative easing could be ‘tapered’ if the US continues to improve.
Lower prices have failed to boost demand for the metal, while investors have been selling out of exchange traded funds tracking gold.
Merk Funds chief investment officer Axel Merk told the BBC: “You don’t want to catch a falling knife, so people who might be buyers are stepping aside and don’t want to show gold at their quarter-end statement.”
Reuters reports that gold is down 25 per cent for the April-June period, which is the biggest quarterly loss since it started tracking prices in 1968.
A number of commentators expect the price to fall further as an improving growth outlook hits its appeal as a safe haven while the possibility that interest rates will start to rise also makes it less attractive.
Last week, Intelligent Investor resource analyst Gaurav Sodhi told CNBC: “$1,200 an ounce, or $1,000: all very possible. We have to remember gold prices have risen for 12 years in a row and they were due for a correction. Sentiment plays a very large role in determining its pricing.”