Between July and September of 2011 the price rocketed from $1,600 to $1,900, and one year later it is back to just below $1,600 per ounce.
Experts have been quizzed in a Reuters poll as to what has caused this stagnation, as their median spot price forecast at the beginning of the year was $1,765.
Ross Norman, chief executive of Sharps Pixley, a London bullion broker, believes there are three factors supporting the price of gold, whilst another three negative factors are serving to cancel out the positive.
The three factors supporting gold prices are firstly that it is a wealth preserver, meaning it holds its value in the long term; secondly, China has supported the price both through private purchasing and ‘discreet buying’ through its central bank; and finally, central banks are being joined by emerging economies such as Argentina, Iran and Mexico.
The factors which are having a detrimental effect on gold prices include a fall-off in physical demand, a drop in sales in India and a strong US dollar.
With gold being denominated in dollars, a gain in the US currency makes gold less attractive to foreign buyers.
Vice president and director of global precious metals at TD Securities Steve Scacalossi said: “We have seen very little in the form of physical demand lately and even the usual Asian buyers have been notably absent.”
Image by Giorgio Monteforti