Gold prices hit 5-year low

Gold prices has fallen more than four percent, which is the lowest it has been in five years. This is caused by the sudden bout of selling overnight in Shanghai and New York. Predictions of higher US interest rates prompted investors to sell the metal, which may have also caused the crash.

There are no exact reasons why people suddenly started trading gold overnight. Analysts believe that it was caused by the massive move to high-frequency trading algorithms and stop-loss selling.

Prices crashed by $40 an ounce in just a matter of minutes as Asian markets started trading at 9:30 ET Sunday. This was before the European trade stabilized. By 9:15 ET, gold went down 2% at only $1,110, which is a level below $1,100.

The last time gold prices were this low was in 2010. Experts claim that this plunge was a big psychological move and could lead to more falls in prices in the future. Other expert believes that gold will reach an all time low of $1,000 by the end of the year, due to this drop in price.

Gold bugs moved away from gold after recent predictions of the Federal Reserve hiking interest rates for the first time in almost ten years. This expected increase in interest rates lead investors to sell gold and invest elsewhere to secure their money.

Besides gold, other commodities like platinum has also went down 5%, which is the lowest it has been since the global financial crisis. Gold is a metal that has high value, but inflation is bringing it nowhere. People find it more appealing to invest in bond and the US dollar.

The drop of gold prices came despite China claiming last Friday that their gold reserve went up to 57%. This is very notable as China is the world' biggest consumer of gold.