Profit-taking hits gold

The price of gold is off nearly 1% as traders lock in their profits from the recent rally.

Gold enjoyed a good bull run over the past month, as the Federal Reserve’s loose monetary policy gave traders a reason to buy the precious metal. Gold has made advances in the past four trading sessions, but today dealers decided to close out their long positions and secure their profits. Even though gold is in a clear upward trend, traders sold the precious metal as no market moves in a straight line – you often see corrections from time to time.

In recent years, investors have been gaining exposure to the price of gold through exchange traded funds (ETFs), which are investment funds that invest in the precious metal. Traditionally the gold market has been traded by long-term investors, but nowadays more short speculators have entered the market. SPDR Gold Trust, the largest gold ETF in the world, announced a large disposal of physical gold yesterday. Smaller traders then started to dump their gold positions for fear that other funds could unwind their positions in the market.

Spot gold chart

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