Gold prices dropped more than 5 percent Friday to a seven-week low, Reuters Wanfeng Zhou reports. It was the precious metal's third-worst day in 20 years, and it's down 9 percent over the last two days. "At this point in time I don't think one can say that the safe-haven rationale for gold is off. It's just that it has been going up so much that we needed a very deep correction," Afshin Nabavi, head of trading at MKS Finance, told Reuters. But for months, as gold prices surged all summer and looked to be heading toward $2,000 an ounce by the end of the year, experts have been looking for signs of a gold bubble.
An ounce cost $255 in August 1999; it went above $1800 before falling back down to $1,631 Thursday. Earlier this month, billionaire financier George Soros warned that gold's steady climb was "certainly not safe and it’s not going to last forever." Forbes's Robert Lenzner noted the market didn't pay much attention to Soros's warning that day, and gold continued to climb. But Lenzner praised Soro for "warning the mob that the gold bubble is not a permanent bull market." It's especially interesting that gold prices are falling now, even as the Federal Reserve announced its outlook for the economy remains fairly grim. Stock prices are falling, as expected, but so are prices of gold and silver, which is unusual, Marketplace's Jeremy Hobson reports. Analyst Kevin Kerr told Hobson that the price drop is just a "knee-jerk reaction," and prices will be back up soon, as people are still worried about inflation.
Want to add to this story? Let us know in comments
or send an email to the author at
ereeve at theatlantic dot com.
You can share ideas for stories on the Open Wire.
Elspeth Reeve
User Comments
Please type your comment and click Post. If you’re not already logged in you will be prompted to log in or register