Gold’s ‘safe haven’ status tarnished by two week slump –

Gold prices were slammed earlier in the week as the outlook for the European economy was downgraded.

The European Central Bank lowered its expectations for inflation and growth during the next three years amid “a slowdown in emerging markets and weaker oil prices”.

The precious metal is often viewed as a store of value which protects against the ravages of high inflation.

In the face of slowing growth and to support febrile markets ECB president Mario Draghi hinted at more quantitative easing last Thursday, which added to gold’s woes.

The comments sent the euro sharply lower against the US dollar, and this weighed on the value of gold as it is seen as a substitute for the US dollar and moves in the opposite direction to the currency.

The slump has brought to an end a brief August rally as market turmoil, coupled with fears over the impact of a slowdown in the Chinese economy, drove investors into gold.