Gold has hit a six month low, prompting a frenzied buying trend in China. The gold price dipped below $1,600 an ounce this week for the first time since August.
Speculators blamed the gold slump on investors growing confidence in stock market stability, as both private and institutional traders turned away from safe haven assets towards riskier holdings such as shares and high yield bonds.
ETF Securities Precious Metals Weekly report said that precious metal traders were also shunning gold, preferring more cyclical investments such as silver.
"The resurgence of risk appetite over the past month has seen investors sell gold, and position themselves for 'the worst is over' scenarios."
But the report revealed the drop in gold price had attracted bargain hunters, stating: "as investors look to have been rotating into more cyclical precious metals, like silver, a fall in the gold price has attracted buyers, prompting a gradual rebound in gold positions."
