Gold prices nosedive in London

November 8: Gold on Friday slumped to $ 308.70 per ounce, nearly $ 5 down on its morning level at the London Bullion Exchange. The fall was rapid and the quantities of metal involved vast, according to dealers. Twelve years ago, the metal sank in tandem with the collapse in the price of oil.

Gold prices plunged to its lowest level since early June 1985 after comments on inflation from the US central bank chairman persuaded bullion banks and investment funds to dump the yellow metal. US Federal Reserve chairman Alan Greenspan said central bank research suggested that the US consumer price index overstated the nation’s actual inflation rate by about one percentage point. In the meantime, physical demand for gold remained weak even though holders of gold in Southeast Asia, buffeted by stock and currency market losses, have slowed sales of jewellery and other gold stores, traders said on Friday. “The flow of gold out of Southeast Asia has to a large degree dried up,” a trader said.