By Max Clarke
The price of gold has plummeted by more than 11% overnight, hitting $1704 at 10:16am BST.
Eurozone uncertainty and doubt of the health of the US economy in particular had turned insecure investors across the world towards gold, pushing the precious metal to a record high of $1913 on Tuesday.
But a boost in US manufacturing orders and consumption yesterday prompted hopes in health of the world’s number 1 economy, sending gold prices plummeting.
“The bubble hasn’t popped, but it is certainly under pressure. Gold has rocketed in the past few weeks on the belief that the Fed Chairman, Ben Bernanke, will increase quantitative easing on Friday in the US, and that the dollar will lose value as a result," explained Jeremy Cook, chief economist at World First currency exchange brokers.
“This makes gold more attractive as an alternative investment. It has dipped as this outcome has become less likely. However, it won’t start really losing value until the global economic picture improves markedly, something we do not expect to happen for at least 6 months.”
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