Will Gold Ever Get its Shine Back?

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After hitting a fresh all-time nominal high in 2011, gold remains stuck in a downward trend that appears to be picking up speed. The precious metal has enjoyed twelve consecutive years of positive gains, but is now unloved by almost the entire market.

The heavy selling pressure seen in April has been followed with even more selling pressure in June. On Wednesday, the price of gold dropped $45 on large volume, while silver plunged nearly $1. Both precious metals closed at their worst levels since August 2010. The SPDR Gold Trust – the most popular exchange-traded gold product – saw its holdings fall to the lowest level since February 2009 as investors rushed for the exits.

The recent decline has been magnified by the Federal Reserve, and its Federal Open Market Committee statement that said downside risks for the economy and labor market “diminished” this year. Last week, Fed Chairman Ben Bernanke even claimed during a press conference that the central bank could begin “tapering” bond purchases later this year, and end quantitative easing programs by mid-2014 if economic projections are met. Since those comments, gold has declined about $150.

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