Prices of the precious metal dropped to their lowest level since the beginning of July

The price of gold on the world market reached a new five-month low, dropping to $1,220 per ounce. Positive data on the US economy convince market participants that monetary stimulus programs will soon be reduced. In such conditions, gold is in less demand as a defensive asset.

As a result of a sharp decline at the beginning of this week, gold quotes returned to the values of six months ago. According to Reuters, the price of the metal today reached $1,220 per ounce, the lowest value since July 8. This result is 2.6% lower than the previous week's close. Other precious metals also showed a sharp decline in prices. Silver fell in price by 4.7%, to $19 per ounce, platinum - by almost 1.5%, to $1,336 per ounce, palladium - by almost 2%, to $706 per ounce.

A confident decline in prices began after the release of another batch of positive data on the US economy. On Monday, the Institute for Supply Management released an index of business activity in the industrial sector of the economy, which rose to 57.3% in November (compared with 56.4% in October) and was at its highest level since April 2011. Analysts expected a decrease to 55%. Positive statistical data increased expectations that the US Federal Reserve will wind down the third stage of quantitative easing, notes VTB Capital analyst Andrey Kryuchenkov. “The attention of market participants is now focused on the Federal Reserve’s announcements about reducing the volume of the quantitative easing program,” UBS precious metals analyst Joni Teves said in an interview with Bloomberg.

Fears of an imminent winding down of monetary stimulus in the US economy also had a negative impact on global stock markets. Leading European and Russian stock indices started today with a sharp decline in quotations. By 16:40 Moscow time, the RTS index fell by 1.9% to 1372.82 points. The MICEX index lost more than 1.5% and dropped to 1,450.3 points. Leading European indices showed a decline of 1.8%. Futures for American indices are trading in the red zone.

On November 11, gold quotations on the world market reached their lowest level over the past month - $1278.9 per ounce. Investors have no reason to play bullish: inflation is slowing in Europe, and the Fed is expected to tighten monetary policy.

Vitaly Gaidaev

Incentives are being taken away from gold