THE PRICE of gold crashed below the $1,200 an ounce mark yesterday despite Federal Reserve officials suggesting that the Fed’s mass asset purchases are here to stay for now.
The iconic yellow metal lost another couple of per cent as it sank to 34-month lows. Having slid nearly $200 an ounce in the last 10 days, spot gold was printing $1,203 an ounce late last night.
Set to lose 25 per cent or more of its value this quarter, data shows that it could suffer its sharpest quarterly fall since the 1920s.
Typically gold has gained during times of loose monetary policy, with the Fed’s quantitative easing (QE) scheme hitting the dollar. But comments yesterday, reassuring investors that the $85bn a month of QE may not be slowed down, failed to prop up the precious metal.
“If labour market conditions and the economy’s growth momentum were to be less favourable than in the Fed’s outlook — and this is what has happened in recent years — I would expect [QE to] continue at a higher pace for longer,” New York Fed chief William Dudley said.
Atlanta Fed boss Dennis Lockhart echoed Dudley's comments.