The correction in the gold price (along with silver and platinum) has clearly rattled investors and speculators in gold and other precious metals. The peak of almost $1,900/oz in gold was reached in September 2011 and since then it has remained in a wide-trading range between $1,800 and $1,540/oz (Chart 1). However, the recent sharp plunge in January and much of February this year threatened to breach the lower boundary of the trading range. A selling climax last week triggered a temporary rally but nervousness prevails.
Many worry that the big move since 2000 may be over. Some legendary gold bulls appear to have folded their hand, a financial squeeze on some large gold holders has become evident and, in January, India imposed additional taxes on gold imports. The litany of bearish factors goes on. As in any market, these always follow the price down just as the list of bullish factors gets big media coverage when the price is rising.