Gold has risen for 12 years in a row. But it looks unlikely to extend its run to 13 prices have fallen by almost 25% this year, to a near three-month low.
The prospect of America breaching its debt ceiling hasn't given gold much of a lift, largely because markets seem to have assumed that a deal will be done.
Moreover, during the past few months, the prospect of the US Federal Reserve making a gradual exit from its money-printing programme has prompted selling by institutional investors.
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This has been offset by, but not fully compensated for, strong demand for jewellery, coins and gold bars in Asia. But recently, Chinese demand has faded. So the short-term view is not encouraging.
However, investors should continue to hold a small amount of gold as insurance. Longer term, as incomes in emerging markets grow, demand for jewellery, or for protection from potential turmoil or inflation, should rise.
Emerging-market central banks continue to diversify their foreign exchange holdings. And an eventual surge in inflation following widespread money printing can hardly be discounted, notes Roger Bootle of Capital Economics especially if "at some stage governments and central banks... choose [higher inflation] in order to try to escape from the debt burden".
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