Bloomberg reports bullion was situated at its highest value in 21 days when the session began. That 21-day span does include the month of September, and early on in the month the precious metal established record high prices of $1,923.70 per troy ounce.
Though the yellowish metal set that price on September 6, the remainder of the month saw gold demonstrate a volatility not typically associated with gold. Gold always had been the preference of investors since it holds wealth during challenging and rocky financial and economic times.
Gold's price fell on Monday due to minimized demand from investors for the precious metal as a storage haven. At the same time, the U.S. dollar was increasing in value, which typically occurs when gold's price dives in value as the two perform the inverse of one another.
When compared with six competing currencies, the world's reserve currency gained on Monday as much as 0.8 percent, according to Bloomberg. The U.S. dollar's increase in value was partially influenced by a spokesman to German Chancellor Angela Merkel clarifying the leader's remarks regarding the sovereign debt crisis tearing through the euro zone. The issue will linger and it will not be solved quickly, the spokesman explained.
"The dollar's strength is weighing on gold," trader Frank Lesh with FuturePath Trading in Chicago told Bloomberg. "Also, some people are waiting on the sidelines because of the volatility in prices."
The metal started the trading day by capitalizing on the afterglow of finance ministers from Group of 20 nations convening in Paris on Friday and Saturday, when the ministers emphasized the need to solve the crisis. But as the trading day continued, gold futures fell with growth-sensitive assets following Merkel's commentary and the follow-up explanation.
The sovereign debt crisis and issues germane to its damaging tendencies and leaders' efforts to reign it in have had mixed impact on the performance of gold futures. The record prices that bullion has achieved this year are largely attributable to the crisis as the value of the euro, which serves 17 nations, suffered as well.
And when Merkel and her spokesman reduced the likelihood of a rapid solution, one analyst commented on investors being compelled to gamble with financial tools.
"The markets and their crisis-fatigued participants were forced to go back to guessing and to positioning themselves for more of the same; uncertainty, volatility, and a quest for shelter from the financial storm," states a note by Kitco Metals analyst Jon Nadler, as cited by The Wall Street Journal.
Another analyst penned a research note citing gold's tendency to dissuade interest due to its volatility.
Rather than categorize bullion as the safe storage many consider it to be, Kitco Metals analyst Sterling Smith pegged gold as a gamble.
"Right now gold's acting more like a risk asset than a safe haven or a currency," analyst Sterling Smith with Country Hedging told The Wall Street Journal. "The weaker stock market and stronger dollar have taken some of the steam out of it."
MarketWatch reports investors' preoccupations with the sovereign debt crisis was in support of the precious metal, particularly because of the wobbly, inconsistent nature of the methods to confront it.
"I see a listless market," Michael K. Smith with T&K Futures in Florida told MarketWatch. "One day (regional leaders) have a plan, one day it kind of falls apart … less and less people are trading, and that trend will continue until we have fundamental news."
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