Gold Prices Today: How Low Will They Go?

We are definitely in the midst of the long-anticipated gold price correction, as gold prices today have plummeted in futures and spot gold.

Gold for December delivery was falling by $31.60 to $1,333.90 an ounce at the Comex division of the New York Mercantile Exchange. Spot gold was down by $26.40 to $1,334.10 an ounce.

With some Asian countries thought to be poised to raise interest rates, concerns it could expand to a number of countries has gold investors on edge.

Today South Korea raised their interest rates, which has been the impetus behind the quick drop in the price of gold.

The U.S. dollar index was also up, rising by $0.79, to reach $79.14. The euro continues its plunge against the U.S. dollar, going down to $1.35 against the greenback.

Even though China was the country most believed would raise their interest rates first, the Bank of Korea did it first, raising rates 25 basis points to 2.50 percent. All of this was precipitated by the consumer price index of China rising to 4.4 percent, which was higher than expected, generating the interest rate speculation and probability.

Rising interest rates work to rein in inflation, which is one of the key purposes of holding gold. The more countries raise interest rates, the more possibility gold prices will continue to have downward pressure on them; at least for the short term.

While inflation is one of the factors, there are many other support mechanisms in place for gold prices, and once the euro/U.S. dollar reverse direction, we'll probably see gold do the same, although announcements from other Asian countries they're going to raise interest rates will cause a more volatile gold market.