(Photo: ) Demand for physical gold rises in first quarter
Gold continued to lose its sheen as a safe haven as its price further plummeted to $1,223.54 an ounce on Wednesday, its lowest since August 2010. By 3:08 p.m. at New York, gold settled at $1,225.91, down by 4 per cent.
It was not only spot gold prices that went down but also gold bullion which shed $125 an ounce in four sessions after the U.S. Federal Reserve announced it would soon end its economic stimulus. There were also sharp drops for prices of silver and platinum.
Commenting on the further decline of the yellow metal, Diapason Commodities Management Chief Investment Strategist Sean Corrigan told Reuters, "We bought gold for two reasons: because we were worried about the inflationary impact of policy and because we thought the financial system was going to fall apart."
He added, "Although it may be completely wrong judgment, the market has decided that none of those at the moment is a concern."
While gold lost more than 25 per cent of its value since January 2013, on Wednesday, the S&P 500 rose by more than 1 per cent in late trade.
Bank of Nova Scotia Head of Precious Metals Simon Weeks explained, quoted by Reuters, "People want risk-on and gold is therefore seen as a source of cash and not as a safe haven, because that's not needed."
However, on the same day, the Toronto benchmark dropped due to a big sell off of gold and silver stocks that settled at multi-year lows. Share prices of Barrick Gold, the biggest gold miner by output, tumbled down 8.3 per cent while Goldcorp shed 4.9 per cent.
Following the continued decline in gold prices, Barrick Gold announced on Wednesday that it will cut 32 positions in its regional head office in Perth, Australia after it laid off 33 employees at its Plutonic mine site on Monday.
"Current economic conditions along with increasing operating costs and a weakening gold price meant the company needed to review and adapt its structure to ensure sustainable business in today's market environment," Barrick said in a statement.
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