Maybe gold isn't so safe after all.
After months of setting record after record, the price of gold plunged $104, or 5.6 percent, Wednesday to finish at $1,757 per ounce. That was the biggest percentage drop in nearly 3 1/2 years and a blow to investors who thought the metal could go only one way -- up.
"Gold was considered a safe haven for years because it wasn't popular, but now it's popular," said Cetin Ciner, a professor of finance at the University of North Carolina -- Wilmington. "You can't have a fad and a safe haven at the same time."
Wednesday's drop followed news that orders for long-lasting manufactured goods rose 4 percent in July, which was more than analysts had expected. Investors also might have been selling on news of new rules in China requiring traders to set aside more collateral when borrowing money to buy gold. After gold settled Wednesday in the U.S., exchange operator CME Group announced it was raising its collateral requirements, too.
Considered a safe investment in times of turmoil, gold has become a favorite among investors worried about rising U.S. debt, the possibility of inflation and a spreading debt crisis in Europe. But many investors simply have been looking to profit from gold's ever-rising price.
In October 2007, gold traded for about $740 an ounce. Two months later, the Great Recession started, and gold began creeping up. This summer, the rise accelerated. Gold started July at $1,482.60 an ounce and hit a record Monday of $1,891.90 -- a gain of 28 percent in less than two months.