Gold prices set to complete their best week since October 2011

Gold prices are on course to see their best week since October 2011, rising by 4.5 per cent.

Last week Deutsche Bank analysts said that the gold correction was complete after the precious metal saw its value tumble over the past month.

Lessons from history suggest that although gold price losses have been extreme, the extent of the price correction today is still some way short of the percentage declines that occurred in 1980-1. However, we would classify events over 30 years as significantly different since at that time US short term interest rates rose to 20% with real interest rates also rising rapidly. As a result, while we still view Fed policy as a strong headwind to gold returns, it is possible that the major part of the gold price correction has now already occurred.