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Gold bugs bail out

Gold bugs bail out
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The price of gold continues to tumble. It is down to its lowest in almost three years and is on course for a record loss in the past three months.

Investors are selling because they believe the Federal Reserve could soon end its ultra-loose monetary policy intended to stimulate the US economy.

The latest economic data from the states increased those fears. There have been strong gains in US orders for durable goods, the largest annual rise in house prices in seven years and consumer confidence is rising.

Some analyst are predicting gold falling below $1,000 an ounce. Spot prices have fallen by more than a quarter this year and by 22.8 percent this quarter.

“We bought gold for two reasons – because we were worried about the inflationary impact of policy and because we thought the financial system was going to fall apart,” said Sean Corrigan, chief investment strategist at Diapason Commodities Management.

“Although it may be completely the wrong judgement, the market has decided that none of those at the moment is a concern.”

Demand in number one consumer India is likely to fall this quarter as the government moves to curb gold imports to reduce a record current account deficit.

In the latest move, India’s central bank told rural regional banks that they could no longer provide loans against gold jewellery and coins.