Gold Sinks in Shock Selloff as Traders Cover Stock-Rout Losses
(Bloomberg) — Gold declined in a sudden selloff across financial markets, with some traders dumping metals to cover losses in equities. Silver and copper also plunged.
US technology stocks fell amid renewed concerns over whether massive investments in artificial intelligence will materialize in a big way. Some investors had to exit positions in commodities including metals to provide liquidity, while some sought safety in Treasuries.
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Bullion fell as much as 4.1% while silver plunged 11%. Copper on the London Metal Exchange declined 2.9%. The metals have since pared some losses.
“It all happened so quickly and feels like a ‘risk-out’ move,” said Nicky Shiels of MKS PAMP SA. In times of extreme market stress, haven assets like gold will also be sold by investors in dire need of liquidity, she added.
Some of the selloff in gold and silver on Thursday also stemmed from profit-taking as the metals’ most recent blistering rally was driven partly by speculative buying.
“For gold and silver, a great deal of trading remains sentiment and momentum driven. On days like these they will struggle,” said Ole Hansen, a commodity strategist at Saxo Bank.
Gold and silver’s ferocious run since 2024 accelerated last month, with momentum-driven buying helping the metals hitting successive highs. That came to an abrupt halt on Jan. 29 with gold plunging the most in over a decade and silver tumbling the most on record.
Since then, both metals have been trading in a tight range with heightened volatility amid a lack of fresh catalysts.
Thursday’s sudden drop in gold prices “doesn’t signal that it’s about to enter a sustained downtrend,” according to Fawad Razaqzada, a market analyst at Forex.com. “It does increase the likelihood of continued volatility in the near term. The market has now cleared out a large pocket of downside liquidity, and the next move will depend on how price behaves around key technical levels.”
What Bloomberg Strategists Say…
Thursday’s AI-disruption driven risk-off tone in equities is starting to broaden out, with metals dropping suddenly on what looks like algo selling.
While there’s been a small bounce, metals are overall getting hit hard in a sudden air-pocket kind of move lower that feels more like systematic strategy selling — the kind of momentum-driven de-risking you often see from the CTA community when levels give way.
