Gold fell almost $58 to $1,614 per ounce. It has declined 15 percent since September, when it hit a peak of $1,907. It had more than doubled since the financial crisis three years earlier.
Surprisingly, the fall came on an ugly day in the stock market – the Dow Jones industrial average lost 125 points. Last year, a day like Wednesday would have caused fearful investors to buy gold as a protective investment.
“It’s difficult to forecast, but I think the gold bull market is over,” said Cetin Ciner, a professor of finance at the University of North Carolina-Wilmington. He likened the surge in gold to dot-com stocks before they collapsed.
Some investors buy gold as a hedge against inflation, and minutes from a Federal Reserve meeting that came out Tuesday afternoon suggested that the central bank believes inflation remains under control.
Gold’s attraction as an asset of refuge during crises also seems to have diminished. The economy has picked up, and worst-case scenarios in the United States and Europe have faded.
“Fear has been gold’s best friend, and so to the extent that fear is dissipating, gold should fall,” said Jim Paulsen, the chief investment strategist at Wells Capital Management. “We might look back at these Fed minutes as the line in the sand.”
Nicholas Colas, the chief market strategist at ConvergEx Group, said he thinks gold’s popularity reflects the anxiety of our age.
The price might change, he said, but an ounce of gold is always bound to be worth something. Old stock certificates, he said, might wind up worth no more than toilet paper.
“The gold rush isn’t over,” he said. “It’s just on pause.”