• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 2 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 4 hours How Far Have We Really Gotten With Alternative Energy
  • 6 hours If hydrogen is the answer, you're asking the wrong question
  • 4 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 5 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 19 hours Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 4 days "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
MINING.com

MINING.com

MINING.com is a web-based global mining publication focusing on news and commentary about mining and mineral exploration. The site is a one-stop-shop for mining industry…

More Info

Gold Prices Plunge Below $2000 After Explosive Rally

Gold prices dropped below $2,000/oz on Tuesday as the dollar clung to recent gains and risk appetite was boosted by an expected US stimulus deal, prompting investors to take profits from bullion’s explosive run to a record high.

Gold for delivery in December – the most active futures contract with more than 40m ounces traded by midday – fell 4.5% or $92.30 from yesterday’s settlement to a low of $1,947.40 an ounce in New York.

Tuesday was one of the biggest one day falls in history, mimicking its performance following the previous record high. Spot gold hit $1,909 an ounce intra-day on 23 August 2011, but the next day suffered one of its few triple digit one-day losses, plummeting $105 and ending the week down more than 10% from the all-time high.

Adjusted for inflation, gold’s highest price point ever was on January 21, 1980 when the precious metal hit $850 only to plunge the very next day to $737.50, a 13% fall.

Inevitable

The biggest fall in percentage terms came in February 1983, when the yellow metal fell from $475 to $408.50 over two days, a 14% decline.  

“The retreat was inevitable,” StoneX analyst Rhona O’Connell told Reuters, adding that gold has been technically overbought for a while.

The fact that gold did not advance further despite rising geopolitical tensions showed that a lot of supportive elements for gold have already been priced in, she explained.

“The recent washout of speculative long positioning sets gold up for a more balanced rally going forward.”

Jeffrey Halley, senior market analyst at OANDA

Meanwhile, global equities hit multi-month highs on expectations that US Congress will agree a massive stimulus deal. Looming US-China trade talks have also raised hopes that geopolitical tensions would ease between the world’s two superpowers.

Related: Green Hydrogen Prices Are Set To Drop By 50% During The Next Decades

“Beyond technical triggers, the fundamental reason for gold’s moves is that the dollar weakness of the past few weeks has paused,” Saxo Bank analyst Ole Hansen said.

Outlook remains bright

But most analysts still expect a positive trajectory for gold, with the metal having gained more than 30% this year as unprecedented money printing by central banks and near-zero interest rates pushed investors into bullion as a hedge against possible currency debasement and inflation.

“It’s quite easy to see gold going to $4,000/oz,” Frank Holmes, CEO at investment firm U.S. Global Investors, told CNBC earlier this week.

He pointed to the trillions of dollars needed in stimulus to tide the US economy during the coronavirus pandemic, and added that G-20 finance ministers and central banks are “working together like a cartel and they’re all printing trillions of dollars.”

ADVERTISEMENT

However, Yung-yu Ma, chief investment strategist at BMO Wealth Management, warned that factors such as the development of a coronavirus vaccine and the November elections could change the fortunes of the precious metal.

Earlier, Russia President Vladimir Putin announced that his country had become the first to grant regulatory approval to a covid-19 vaccine after less than two months of human testing.

By Mining.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News