Gold flat after slump

The price of gold is broadly unchanged this morning as dealers are nervous about going long after the recent collapse in price.

Yesterday the price of gold dropped to the lowest level since September 2010. The precious metal has fallen 21% since the start of April, and gold is on track for its worst-performing quarter since 1920. The recent sell-off is thought to be driven by long-term investors rather than short-term dealers, and a number of exchange traded funds (ETFs) have relinquished their holdings in gold.

Gold has been in a downward trend since the start of the year, but its descent accelerated when Ben Bernanke of the Federal Reserve suggested the current quantitative easing programme will be trimmed towards the end of 2013.

A number of investment banks such as Goldman Sachs and Credit Suisse have cut their forecasts for the price of gold, and when well-respected banks downgrade their outlook for a metal it can compound the falling price.

Spot gold chart

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