Gold falls to five-year low as fears ease over Greece
The gold price fell to its lowest for more than five years as the precious metal was buffeted by the deal to avert a Greek bankruptcy, a potential US interest rate increase and a sharp sell-off in China.
Gold encountered a wave of selling in Asia that drove it down almost 4% to as low as $1,088 an ounce before recovering slightly to $1,114. The last time gold traded at that level was March 2010.
The fall was prompted by heavy trading in China, the world’s biggest consumer of gold. The drop was exacerbated by the triggering of stop-loss orders, which are trades arranged to limit a trader’s loss on an investment as the price falls.
China said on Friday that its gold reserves had increased by 57% from the last time it adjusted its figures six years ago, sending the gold price down on the day. Analysts at Barclays said gold could have fallen following the announcement because investors realised China would not increase reserves that much again, cutting off a strong source of demand.