The price of gold has declined through most of 1997, dipping below $300 per ounce in early December. While industrial and jewelry demand remains high, central bank sales more than offset it. The strength of the dollar is increasing fears that still more gold will leave central bank vaults as foreign countries demand more U.S. currency. Strong stock markets, by providing a very attractive alternative asset, have also reduced the private demand for gold. Financial turmoil in Asia may eventually enhance gold’s attraction, but the effects are not yet apparent.
Suggested citation: “Gold Prices,” Federal Reserve Bank of Cleveland, Economic Trends, no. 97-12, pp. 07, 12.01.1997.