Stocks spent another day in the red Wednesday as prospects of a deep global recession continued to rattle investors. CNBC's experts question why gold's price has declined while demand for the precious metal, and typically safe-haven stock, has increased.
Gold Reaches Record Demand
The World Gold Council reported record demand for gold in the third quarter. "There's been a recovery in demand, up 50% in terms of dollars," George Milling-Stanley, director at the World Gold Council, said.
"Gold's been acting like an insurance policy. Investors have been able to sell gold into a deep and liquid market in order to preserve their other investments. That's why we've not seen these very healthy demand figures translating into a stronger gold price yet," Milling-Stanley added.
Is Gold Losing its Luster?
"Gold is losing its luster," Daryl Guppy, CEO of gupptraders.com, told CNBC. Guppy adds that the support level for the precious metal is $700. If gold rebounds from that level, it will come across resistance at $780. Meanwhile, if it falls below $700, it could continue to decline to $620.
Once Deleveraging Abates, Gold Could Climb
Institutional selling of gold amid deleveraging of commodities to raise cash is offsetting the current retail demand for the precious metal, says Marcus Grubb, managing director, investment research and marketing at the World Gold Council.
There should be a stronger gold in the fourth quarter if the commodity deleveraging abates at the same time, Grubb said.
Auto Bailout Would Create 'Unfair Playing Field'
A US government bailout of General Motors will raise trade issues in the global automotive industry, and may create an "unfair playing field" for US companies, Mike Thompson from Standard & Poor's said. Eric Alain Michelis from Societe Generale commented on the implications of the bailout on carmakers in Europe.
Auto Bailout Negative for Dollar
The auto bailout will be negative for dollar sentiment, says Ray Attril, global head of research at Forecast.