Gold Price Markets Plunge on Alleged Goldman Fraud Investors Selling

The gold price plummeted as news that Goldman Sachs has been charged by the Securities and Exchange Commission with defrauding investors by misstating and omitting crucial facts about a derivative product tied to subprime mortgages sent shockwaves through the markets.

The price of gold hit a low print of $1,130 per ounce, dropping over 2.5%.

The gold price sank as investors in all asset classes ran for cover. Markets were already down earlier in the morning session as traders began taking profits in stocks and commodities after impressive run-ups in recent weeks – and heading into a weekend where concerns over tighter monetary policy in China were mounting.

The gold price fell victim to broad-based liquidation, joining the rest of the commodity complex on the downside. Gold stocks followed the gold price lower, evidenced by the 3.3% decline in the Market Vectors Gold Miners ETF (GDX). Oil futures are lower by 2.6%, copper futures are off 2.1%, and the S&P 500 is down 2.1%. Investors fled to U. S. Treasuries where the yield on the 10-year note fell 7 basis points to 3.76%.

Some of the pressure on all assets, including the gold price , stems from reports of involvement in the fraud that include John Paulson and a transaction involving his firm that is the subject of the Goldman allegations. While Paulson’s name has not been mentioned in connection with the SEC charges against Goldman Sachs, the news that this high-profile investor may be involved caused investors to sell first and ask questions later.



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