During the trading session on April 15 gold prices tumbled 9% and crashed below the psychological threshold of $1,400 per troy ounce. According to the gold price chart posted on CME Group website, gold sunk as low as $1,355 per troy ounce during the day.
The price collapse was the biggest since 1983, The USA Today said. Gold is $527 cheaper compared to the all-time high in 2011. A substantial part of the drop took place during two prior weeks because in early 2013 the gold price was at the level of $1,700.
Gold was seen as a safe haven for investors amid instability on currency and stock markets. During 2000's gold enjoyed strong demand from investors, thus enabling its price to constantly increase. In 2000 the price of the precious metal was roughly $250 per troy ounce.
Widespread gold sales could be regarded as a sign of investor weaker confidence in gold as a safe haven and greater demand for less risky assets. However, according to The USA Today, the sales began after the news of a slowdown in China's economic growth. This fact has raised concerns about the decrease in the demand for gold in the world’s second largest economy.
In addition, gold has been used as a hedge against inflation. As far as these days global economic growth is slowing down, investors are more concerned about deflation, rather than inflation. This is why they tend not to invest in gold.
Gold stocks dropped amid falling bullion prices. Thus, U.S. New Gold shares edged down 15.1% and Kinross Gold Corporation decreased by 13.92%. On the whole, S&P 500 fell 2.3%.