Gold, one of 2014's stellar performers, sold off more than 2% Monday in a rout that traders blamed on profit-taking and pre-placed sell orders.
Gold started the year at
People invest in gold when they feel unsure about paper assets, particularly currency, or when war or other disruptions threaten to disrupt the financial system.
So far this year, talk of inflation -- which erodes the value of currency -- has been elevated, in part because May's consumer price index jumped 0.3%, bringing the 12-month inflation rate to 2.1%. The Federal Reserve has said that it aims for a 2% inflation rate, as measured by the core personal consumption expenditures price index, which rose 1.77% in May.
The tensions between
Why the sell-off Monday? Hard to say. The gold market is small: A few relatively large trades can sway the gold market fairly quickly.
"Any of the major gold-trading firms or large-scale institutional speculators -- acting independently -- has the power to knock gold one way or the other by
Currently, several large investment banks are negative on gold. Still, signs of higher inflation -- or further world unrest -- could send gold prices up again.
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