20th July 2015
The price of gold has dropped to its lowest level in more than five years as fears over a potential US interest rate rise has driven investors to dump the precious metal.
The cost fell 4% to as low as $1,088.05 (£697) an ounce – the lowest since March 2010 according to BBC News. The price of platinum echoed gold’s fall with a 5% drop.
Instead investors have been looking to the US dollar, which has strengthened further on the possibility of the US central bank, the Federal Reserve hiking rates later this year. Many economists are expecting a rise to happen as early as September.
The price has since bounced back slightly, rising to $1,115.26.
Speaking to the BBC, IG market strategist Evan Lucas said the recent slump in gold prices could signal a “retracement” to $1,000 an ounce by the end of 2015.
He said: “There are no clear signs, or reason, to buy it. It is an inert metal that is a store of value yet inflation is heading nowhere and investment in the US dollar and bonds is clearly more appealing.”
The appeal of gold, which is usually snapped up during times of uncertainty, has been cooling on the back of the stronger greenback, which strengthened further last week after Fed boss Janet Yellen, repeated that the bank was on track to raise rates in 2015.