Gold extended losses in a volatile session, falling below $4,080 an ounce after Tuesday’s sharp 6.3% plunge, its worst drop in over 12 years, amid concerns the rally had overheated, according to Jack Ryan, Sybilla Gross, and Yihui Xie of Bloomberg. Analysts cite technical selling and overbought conditions as key drivers, though gold remains up 55% this year. They write:
Gold extended losses in a choppy session, after suffering the worst rout in over 12 years on Tuesday on concerns its rally had run too far, too fast.
Spot gold slid below $4,080 an ounce as European trading got underway, after swings that saw it slump almost 3% earlier and then recover. That was a day after bullion tumbled as much as 6.3%, with technical indicators showing a price surge that broke successive records this year was likely overstretched. […]
The pullback brought an abrupt halt to rapid advances that have been underway since mid-August. The so-called debasement trade, in which investors avoid sovereign debt and currencies to protect themselves from runaway budget deficits, and bets the Federal Reserve will make at least one outsized rate cut by the end of the year have been the primary drivers in recent months. Gold is still up about 55% this year. […]
The US government shutdown has also meant traders have been left without one of their most valuable tools: a weekly report from the Commodity Futures Trading Commission that indicates how hedge funds and other money managers are positioned in US gold and silver futures. Without the data, speculators may be more likely to build abnormally large positions one way or another.
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