Price of Gold in 2013: Is This Year's $475 Plunge Just the Beginning?http://www.fool.com/investing/etf/2013/12/21/price-of-gold-in-2013-is-this-years-475-plunge-jus.aspx Dan Caplinger
December 21, 2013
Coming into 2013, investors in gold had enjoyed 12 straight years of gains, giving them high expectations for the future of the yellow metal. Yet the price of gold in 2013 plunged by more than 25%, losing $475 per ounce and remaining just barely above the $1,200 mark at its most recent reading. In hindsight, it's important to understand what precipitated the big decline in the price of gold in 2013 and to figure out what investors can learn from their mistaken optimism.
What caused gold prices to decline in 2013?
But the real problems for gold became evident to mainstream investors in April, when gold prices plunged $200 in a two-day span to their lowest levels in two years. With the banking crisis in Cyprus going on at the time, gold investors feared that the island nation's central bank would have to liquidate its gold reserves in order to shore up its financial system. That change in sentiment reversed the conventional thinking that central-bank purchases would continue to support the price of gold through 2013.
From there, further gold-price declines stemmed from increasing worries about an imminent shift in the Federal Reserve's monetary policy. For years, one of the underpinnings of the bull-market move in gold had been the Fed's aggressive moves to keep interest rates low. Yet in June, the Fed first signaled that it would consider pulling back on its latest round of quantitative easing, and even the possibility of such a move sent gold still lower, touching the $1,200 level.
An investor exodus?