Gold price falls as investors turn to equities

Gold bullion prices have declined, with ’green shoots’ signals of a potential recovery in the global economy leading to an increased appetite for risk among investors.

Over recent days, the market price of gold dropped from over $920 an ounce to below $880, before ending the week at $905.

Equities markets showed across-the-board gains at the same time, with the FTSE 100 in London rising by 5.3 per cent last week.

The precious metal is seen as a ’safe haven’ among investors spooked by volatile conditions in the stock and bond markets.

A collapse in confidence caused by the credit crunch and global economic downturn has therefore resulted in gold prices touching all-time highs over recent months.

Meanwhile, global stock markets have lost almost half their value since the onset of the crisis in 2007.

Speaking to the Bloomberg news agency, Bob Takei at Sumitomo commented: ’The gold price came off from $920, $930 because the equity market has been performing better.’

He added: ’We may be through the worst, but we’re not yet out of the woods… I don’t recommend people holding gold positions at the moment to sell. Keep it just in case something happens.’

Last week’s G20 meeting in London, at which a $1 trillion package aimed at tackling the global economic downturn was agreed, has been seen by analysts as a major factor in last week’s stock rally.

A surprise report from Nationwide, showing that UK house prices rose by 0.9 per cent last month, also spurred the FTSE gains.ADNFCR-2318-ID-19109425-ADNFCR