Falling Euro Prices Derails Gold’s 11-Year Bull Run
Prices of gold fell on June 28, proving that it is not the safe investment haven that it was a couple of days ago. The falling Euro prices seem to have had a major role in bringing down the prices. The impending European summit also has not been able to create a positive attitude that a solution for Euro’s woes might be around the corner.
Prices Fall To an 8-Year Low
On June 28, gold prices came down to $1,568.80 per ounce, which was an all time low with regards to this year’s price fluctuations. Later on the day, it did pick up a little but not by much. The prices seemed to be around the aforementioned figure and did not show any signs of reaching Wednesday’s figure of $1,574.40 per ounce. This marks the end of an 11-year bull run that gold enjoyed, adding more concern to the European crisis.
Germany’s Statement Had a Major Effect
France put forward a few proposals which could take the European nations out of the current crisis. Since it involved sharing of liability, Germany was not too keen on it. This was expected considering Germany is one of the few countries which have not been affected much by the current economic crisis. A statement from Chancellor Angela Merkel doused whatever expectations people had on these proposals. This was evidenced by the fall of bullion soon after. Experts are of the opinion that this fall is expected to continue further.
Selling Gold for Liquidity
Robin Bhar, an analyst at SocGen said that this might be a temporary situation, a reaction to the economic crisis that is raging across Europe. But he told that buying will increase as the prices are lowered and this will again cause an increase in the prices. He highlighted the fact that people are worried more about the liquidity than the assets they own and hence, are selling gold to gain more liquidity.
Some of the weaker economies of the world are counting on the demand on gold from Asian countries like Indonesia and India, the world’s largest gold consumer. The reduced prices is sure to prompt a buying from these countries.