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AAA  Apr. 17, 2013
The glitter is gone
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The price of gold is sinking like lead.

It's down 17 percent so far in 2013, with most of the drop coming in a two-day plunge Friday and Monday. At $1,387 an ounce, gold is at its lowest price since February 2011. It's a shock to investors who watched the metal's value more than double from 2009 through the summer of 2011.

Analysts say you shouldn't rush to "buy low." Several are calling for the price of gold to stay roughly where it is for years. Citi forecasts gold will sell for an average $1,435 an ounce in 2014. Looking further ahead, Credit Suisse analysts expect gold to average $1,420 in 2015.

There are several reasons gold may remain low:

•Modest inflation Critics of the Federal Reserve's aggressive economic stimulus feared that it could lead to runaway inflation. But inflation has remained tame — below 2 percent a year in most developed countries. Investors tend to buy gold when they expect inflation to increase.

•Threat of lower demand, more supply Economic growth is slowing in China, the world's second-largest source of consumer demand for gold after India. Speculation is also rising that Cyprus and other European countries may sell gold to strengthen their finances.

•Strong stocks The Standard & Poor's 500 index is up 10 percent in 2013, offering investors better returns than gold.

Associated Press
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