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Investors run from gold as fears of inflation in U.S. ease

April 15, 2013|By Roger Vincent
  • The price of an ounce of gold was down 7% to as low as $1,398 an ounce Monday, after falling 5% on Friday.
The price of an ounce of gold was down 7% to as low as $1,398 an ounce Monday,… (Frank Rumpenhorst / AFP/Getty…)

Gold prices plunged to a two-year low as investors fled from precious metals.

It was the second day of decline for gold as the economy improves and fears of inflation in the U.S. ease. Gold is often purchased as a hedge against inflation.

The price of an ounce of gold was down 7% to as low as $1,398 an ounce Monday, after falling 5% on Friday. The recent all-time high was $1,924 an ounce. Silver and copper prices also dipped.

Concerns that China’s formidable economic expansion is slowing sent jitters through the market. The Asian giant reported slower than expected economic growth in the first quarter, provoking worries about the sustainability of Europe’s recovery.

Such challenges overseas suggest that the U.S. would appear to be a safer haven for investment, and lowers the likelihood of inflation here.

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The country of Cyprus also jangled investors’ nerves with a recent proposal to sell some of its gold reserves in order to prop up its banks. That raised concerns that other troubled European countries such as Italy and Spain might sell some of their reserves and flood the gold market.

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