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Gold Plunges to Almost Three-Year Low, Attempts to Recover

June 27, 2013 at 1:37 by Vladimir Vyun

Gold plunged to the lowest level in almost three years as speculations that the US Federal Reserve will tamper its stimulus program continued to hurt the metal market. Such speculations drive the dollar up, hurting commodity prices at the same time. Even the downward revision of US economic growth to 1.8 percent in the first quarter (it was at 2.4 percent in the preliminary estimate) did little to change things as the rate of expansion was still far above the previous quarter’s 0.4 percent.

The metal recovered a bit today. Some policy makers were arguing that the health of the US economy does not warrant reduction of stimulus so soon. Additionally, central banks of other developed nations signaled that they are going to keep their policies accommodative. This helped the precious metal, but the gold market remained in a bear phase.

Futures for delivery of gold in August rose $3.1 (0.25 percent) to $1,232.9 per troy ounce as of 1:14 GMT on COMEX today. Yesterday, the price touched $1,222 per ounce, the weakest since August 2010.

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