Gold collapses in morning session

Gold has now dropped by 23% in the second quarter of 2013, wiping out the last three years’ worth of gains.

Gold's technical charts over the last three months show that a number of possible support levels have come and gone and there has not been much of a fight by traders or investors to arrest this fall. Gold bulls must be asking themselves when this onslaught will end.

As with so many asset classes at the moment, comments from the US Federal Reserve have gone some way to affecting gold’s performance, and the fact that the Fed feels the recovery is well enough underway to start talking about a reduction of the $85 billion monthly QE policy will have negated many traders’ fears and desire to seek safe-haven investments.

Part of the problem gold has faced is the compounding issues that have arisen from so many Exchange Traded Funds, which have needed to sell some of their physical gold held due to the underlying price dropping.

Gold has always been an investment that has created polarised opinion and those that are bullish tend to be long-term holders. The question is where and when will fresh investors decide that the price has fallen enough to warrant attention. At the moment it still feels like there is more to come.

Spot Gold (DFB) chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.