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30 June 2013 | Adam Leach
The global price of gold fell below $1,200 (£789) an ounce for the first time in three years on Thursday (27 June) as investors fled over concerns that the US Federal Reserve is to ease its bond buying.
The steep decline, which saw the price reach as low as $1,191.21 an ounce, was attributed to investor fears that interest rates would rise after a statement from the Federal Reserve indicated it would roll back on its asset buying programme. Earlier this month, Federal Reserve chairman Ben Bernanke said the US would “scale back” its $85 billion (£56 billion) a month bond buying programme, which has been key to keeping bank borrowing costs low.
During the ongoing period of global economic uncertainty gold has gained a reputation as a relative safe haven for investors, but the prospect of higher interest rates in the US – a country in which such financial announcements have the ability to hit the global economy in general - has injected doubt into the investment community.
The three-year low came days after Credit Suisse cut its forecast on the gold price for three months’ time from $1,300 (£855) an ounce to $1,150 (£756) an ounce. Investment bank Goldman Sachs has also lowered its forecast on the commodity.