Gold price falls back to $4,000 on technical selling
Gold extended losses on Wednesday after suffering its worst single-day decline in over 12 years, as investors continue to book profits off technical signals ahead of key US inflation data due later this week.Spot gold fell another 2% to about $4,039.50 per ounce by midday, having already fallen more than 6% in Tuesday’s rout. US gold futures also took a 1.5% hit, falling to about $4,050 per ounce in New York.Click on chart for live prices.Despite the heavy losses, bullion is still holding above the key $4,000-an-ounce level, which it traded at two weeks ago. During that period, the metal has soared at a rapid pace, hitting record highs in successive sessions. On Monday, it reached an all-time peak of $4,380.89 per ounce.Technical sellingSuki Cooper, head of commodities research at Standard Chartered, attributes the fall in gold prices to “technical selling”, as the yellow metal had entered overbought territory since the start of September. Still, the bank expects gold to regain its momentum next year, according to her note to Bloomberg.“Given the aggressive move to the upside over the course of the last several weeks, it’s not completely surprising to us to see a bit of profit taking ahead of the CPI report on Friday,” David Meger, director of metals trading at High Ridge Futures, told Reuters.The pullback brings an abrupt halt to the rapid advances that have been underway since mid-August. The so-called debasement trade, in which investors move away from currencies to protect themselves from runaway budget deficits.After sitting on the sidelines for much of the early period of gold’s rally, retail investors have taken a bigger role in recent months, in part enthused by the debasement theme. Bloomberg data shows that options volume on the top gold-backed ETFs and futures contracts, a popular way for retail investors to take big bets on the metal’s value, has surged.Gold ETFs reached highest level since 2022 as market rout struckThe rally was also fueled by expectations that the US Federal Reserve will make at least one outsized rate cut by the end of the year. Currently, trades have priced in a 25-basis-point rate cut at the Fed’s meeting next week.Meanwhile, investors are also awaiting clarity on next week’s potential meeting between US President Donald Trump and Chinese President Xi Jinping, as well as a proposed summit between Trump and his Russian counterpart Vladimir Putin.More gains aheadDespite the two-day rout, gold is still up about 55% this year, bolstered by the above-mentioned factors such as geopolitical tensions, economic uncertainty, expectations of US rate cuts and strong inflows into ETFs.“We maintain a bullish outlook for gold and silver into 2026, and following a much-needed correction/consolidation, traders will likely pause for thought before concluding the developments that drove the historic rallies this year have not gone away,” said Ole Hansen, head of commodity strategy at Saxo Bank, in a note to Reuters.Meanwhile, Citigroup has cut its overweight gold recommendation after the slump on Tuesday, citing concerns about stretched positioning. The bank is now expecting further consolidation around $4,000 an ounce in the coming weeks, strategists including Charlie Massy-Collier said in a note.“Eventually the older part of the gold bull story — continued central bank demand to diversify away from the US dollar — may come back, but at current levels there is no rush to position for that,” they wrote, adding that prices had “run ahead of the ‘debasement’ story.”(With files from Bloomberg and Reuters)Sponsored: Secure your wealth today — buy gold bullion directly through our trusted partner, Sprott Money.Weiter zum vollständigen Artikel bei Mining.com
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