Gold prices surged more than sevenfold in the decade after 2001 but after peaking at $1,920 per ounce last September, prices been falling rapidly as the US economic recovery creates better alternatives for investors, reports the Financial Times. Yesterday, gold hit a 10-week low of $1,627.68—down 9% from late February—and interest in gold futures on COMEX, New York's commodity exchange, is close to a two-and-a-half-year low. Sentiment towards gold is as low as it has been for many years, possibly since the rally started,” one commodities trader says.
Analysts expect gold to drop as low as $1,450 in the next month, as both Asia and Middle East markets have seen a big drop in demand. “Investors are not using this [price correction] as an opportunity to buy cheaper gold,” says one analyst. “Instead, more are looking at the potential to short it." Some analysts, however, note that major investors including George Soros sold off their gold amid signs of recovery early last year, only to see the price rise as economic worries made a comeback. (Read more gold stories.)