You are here
Market Brief - Africa Economic Financial Brief 22-26 April 2013
In mid-April 2013, gold slumped the most in 33 years in the global markets on signs that the precious metal is entering a bear phase1 . This reflected the weakening of investors’ faith in gold as a store of value and a safe haven asset. Gold, which reached an all-time high of USD1920 per ounce in September 2011, was trading at around USD1470 per ounce at the beginning of April 2012 against USD1650 per ounce at the closing date of 2012. The main trigger of the mid-April selloff was the concern that Cyprus may sell its excess gold to cover the bailout plan which in turn may induce other European countries to monetize their gold reserves leading to higher supply of gold by central banks and pushing down prices. Also, the unexpected slowdown in the Chinese economy in the first quarter of the year raised investor worries that more cash will be needed to cover the positions of their futures contracts with brokers on the Comex, the commodity exchange based in New York.