Gold is stable despite price correction

gold-bars1The recent correction in the gold price is not a reason to worry about the stability of gold investments, according to Marcus Grubb, managing director for investment at the World Gold Council, who says the metal's volatility is small compared with other asset classes.

“I always find it amusing that people will see a move in gold of 6-7%, in a few days or a week, and then a similar one on the downside, and run around calling the end of the world and the end of the gold bull market,” he said. “You see intra-day moves in stock markets of that size on individual equities and nobody says a word.”

The gold price reached a record peak of nearly $1,900 an ounce on 22 August before slipping to $1,750 two days later. Some investors predicted the end of a decade-long rally in gold which has proceeded with particular speed since the onset of the Eurozone crisis, when investors turned to the metal as safe haven. In the past year, gold has increased in price by about a half.

But Grubb dismissed the argument: “You were bound to get a bit of a pullback after such a strong upmove and we seem to be stabilising now around $1,790 so overall, I would say gold has shown its stability.”

Grubb said the recent pullback was the third correction in the gold price this year.

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