Gold Plummets Over 2% Amid Global Market Selloff
In a dramatic turn of events, gold took a nosedive of more than 2 percent on Monday, swept up in a broader market selloff fueled by mounting economic fears. Analysts, however, view this as a temporary setback for the typically reliable safe haven.
By 10:15 a.m. ET (1415 GMT), spot gold had plummeted 2.2 percent to $2,389.79 an ounce, while US gold futures saw a 1.6 percent decline to $2,430. Spot silver also experienced a significant drop, down 5.1 percent to $27.08.
Global Markets Roiled by Economic Concerns
The turmoil extended beyond precious metals, with Wall Street taking a hit as fears of a potential US recession, sparked by lackluster economic data from the previous week, reverberated across international markets.
Jim Wycoff, senior analyst at Kitco Metals, remarked, “Investors are spooked and they’re selling what they can, and that includes gold and silver.”
Autocatalysts Platinum and Palladium Follow Suit
The sell-off wasn’t limited to gold and silver, as platinum and palladium also saw a sharp decline, reflecting deepening worries about industrial demand. Platinum dropped 4.3 percent to $917.10, while palladium lost 3.5 percent to $859, hitting its lowest point since August 2018. These metals are crucial components in engine exhaust systems for emissions reduction.
Gold’s Role in Uncertain Times
While gold is traditionally seen as a safe haven in times of uncertainty, it was not spared from Monday’s widespread sell-off as investors offloaded assets across the board. On the other hand, Treasury bonds saw increased demand, with US 10-year yields hitting their lowest levels since mid-2023, fueled by recession fears following a dismal July payrolls report.
Hope on the Horizon for Gold Investors
Despite the current downturn, analysts remain optimistic about gold’s prospects moving forward. With a year-to-date increase of over 16 percent, gold could bounce back given ongoing political uncertainties and expectations of interest rate cuts from the Federal Reserve. These factors are expected to support the zero-yield bullion. Market expectations now point to a potential 50 basis point cut in the September meeting by the central bank.