The price of gold came under considerable pressure on Tuesday and fell below the $2,000 mark for the first time this year.
At its lowest point, the price for one troy ounce (around 31.1 grams) fell to $1,990 on the London Commodity Exchange. This is the lowest level since mid-December. Compared to the previous day, there were losses of around $30 or around 1.4 percent. The price of silver also came under pressure; in percentage terms, it fell even more significantly than gold.
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The price declines were triggered by inflation data from the USA. According to figures from Tuesday, inflation continued to fall in January, but not as significantly as experts expected. Expert Elmar Völker from the Landesbank Baden-Württemberg commented that the figures are a severe damper on the hope that the Federal Reserve will quickly reduce its interest rates. Gold is considered protection against inflation. However, high interest rates are detrimental to investing in gold because the precious metal does not generate regular income such as interest.
The American dollar, which gained significantly in value according to the inflation data, is also having a negative impact. Precious metals are mostly traded internationally in US currency. If the dollar rises, gold becomes more expensive for investors from other currency areas due to exchange rates – which can put a strain on their demand and ultimately cause the price of gold to fall.
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LONDON (dpa-AFX)
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