Gold price edging near 2 month low

Gold prices are edging closer to a two-month low following increased pressure thanks to a stronger US dollar.

Monday (August 25th) saw gold drop 0.3 per cent to $1,277.19 (£770.20) by 13:52 EDT with experts highlighting stronger US economic data and a significant improvement in global financial markets as the key factor behind this decline. It follows gold prices dropped by a weekly amount of 1.8 per cent, the biggest fall in a month, and set a two-month low of £1,273.06 late last week.

The US economy was one of the defining factors behind the drop in gold price. The nation's benchmark Standard and Poor's (S&P) passed the 2,000 mark for the first time prompting optimism that the European Central Bank would react to boost economic growth to trigger an increase in global financial markets.

It has been a highly positive recent week for the S&P 500 Index, as not only did it manage to push through the 2,000 barrier but also hit a record finish for the 29th time this year. Over the course of Monday, the S&P 500 grew by 9.52 points to 1997.92, an 8.1 per cent increase on the same period a year earlier. It is on track to beat 2013's record of hitting an all-time high on 45 occasions throughout the year.

The buoyancy on the S&P 500 has now impacted on the gold market, HSBC precious metals analyst James Steel said: "Equity markets continue to be strong, robbing gold of the opportunity to go higher."

The drop in bullion price has attracted jewellery buyers from Asia with the premiums for gold bars in Hong Kong standing between 70 cents and $1.10, which had been made possible due to the amount of interest from jewellers.

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