PORTLAND – The price of gold saw its biggest drop in 30 years Monday, which could be a sign of an improving economic outlook.
The price of an ounce plunged 9 percent, or 140 dollars, Monday. It bounced back a bit Tuesday, with a 1.9 percent climb.
Gold has fallen about 28 percent since its height of $1,900 an ounce in 2011. That drop has also affected the price of silver, which is down just over 11 percent.
Most people wanting to sell their gold jewelry are now holding off, but gold buyers are looking to scoop up as much as they can.
“Because gold doesn't pay a dividend or interest, the price is really driven by investor psychology,” said CEO Tim Phillips of investment firm Phillips & Co. “And when psychology about the economy improves, you tend to see gold prices pull back.”
Phillips also said gold is a fear-based commodity. Demand and prices jumped after 9/11 and again after the banking crisis in 2008. During those times people bought gold as an inflation-fighter.
Jewelry prices will not likely drop immediately, because jewelers are reluctant to discount until they are certain that a price drop is not just temporary.