Gold stock and bullion prices disappoint

Rising interest rates and the recent turbulence in the debt markets, resulting from the US sub-prime mortgage crisis, have increasingly put pressure of the price of gold bullion.

Recent market events have triggered a significant sell off in stocks, reducing the breadth of assets attractive to investors.

As a result, both commodity and metals stocks have fallen in value, with gold stocks seeing the biggest decline among metals shares.

Gold stocks have fallen 34%, from 12-month highs, compared with falls of 7% in the Dow Jones Industrial Average, 8% in the Standard & Poor’s 500, 8% in the Nasdaq Composite, and 10% in London’s FTSE 100.

Prior to the events of early August, when stock markets were highly volatile, there were already signs that commodity and metals stocks would fall in value.

In China, the world’s fastest-growing major economy, authorities have been taking measures to slow growth.

At the same time, US data is showing a growth rate of below 3% over five consecutive quarters.

Given that gold bullion is seen as a “safe haven” for investors, the performance of gold bullion and gold stocks has been extremely disappointing.

Furthermore, a number of metals, including copper have continued to rise in price over recent weeks, despite the unfolding drama.