Gold’s reputation as a safe haven for assets in times of crisis continues to tarnish as investors back away from the suddenly volatile precious metal, according to Reuters.
Despite ongoing economic turmoil and concerns about both the dollar and the euro, gold lost nearly 11 percent in September, illustrating the substantial uncertainty in the market. With fewer guarantees than in years past, investors have increasingly turned to stocks as the situation in Europe appears to be heading toward some form of preliminary solution.
“Stocks are up, European leaders are in the race of their lives right now to secure a deal at the weekend and with all that is going on, gold has been left on its own and technical trading is beginning to take over,” Ole Hansen, a manager at Saxo Bank, told Reuters. “It’s lost its momentum and on that basis, there is a fear creeping in that we will need to see a deeper correction before it can pick up again.”
In particular, Bloomberg notes that plans by France and Germany, the two largest economies in the euro zone, to substantially increase the size of rescue fund designed to protect embattled banks has reduced demand for gold.
As of 10:30 a.m. on Wednesday, October 19, gold stood at $1,658.10 per troy ounce, an increase of $5.30 per troy ounce, or roughly 0.32 percent.