Gold tumbled to the lowest price since July 2011, slumping into a bear market, on signs that investors are favoring the dollar and equities as the global economy recovers. Silver dropped the most since June.
On Friday, gold collapsed to the lowest level since 2011, pressured lower by expectations that Cyprus may be forced into selling a portion of its gold holdings. Although Cyprus received emergency bailout funds in recent weeks, the government is expected to take additional losses from bad loans that it made to commercial banks. The island nation is expected to sell more than $500 million worth of its gold holdings to help pay for the losses, which spawned a sell-off in the global gold market.
Record highs in US stock markets and expectations for decreased stimulus from the Federal Reserve in coming months also served to deflate gold bulls’ expectations. During Friday’s sell-off, investors fled gold to put their money into bonds and cash. Yesterday Apr ’13 gold futures were down $95.00, or 6.01%, at$1,485.60 an ounce.
Gold investors have been particularly disappointed in recent months as “bullish” factors such as increased talk of bailouts in Europe and geopolitical concerns regarding Syria and North Korea did not cause gold to rise.