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Gold Sinks Below $2,000; Analysts Warn Correction Could Continue

CommoditiesAug 11, 2020 02:17PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com -- Gold plunged Tuesday as demand for safe-haven fell following positive vaccine news and ongoing hopes for another road of fiscal stimulus, with analysts warning the correction could continue for a while.

At 2:15 PM ET (1815 GMT), gold was down 4.8% to $1,934, on pace for the biggest pullback in seven years, according to Bloomberg.

"It would not surprise us if the correction were to continue for a while, for the scale of the upswing over the past four weeks has been excessive. This was made clear by the extremely high RSI and the pronounced deviation from the 100-day moving average," Commerzbank (DE:CBKG) said. "Sentiment towards gold became positive in the extreme, with only a minority of participants sounding a note of caution."

The move lower in gold comes in the wake of the falling safe-haven as news about a Russia-made Covid-19 vaccine lifted investor bets that drugmakers could ready a cure sooner rather than later.   

As well as positive vaccine news, fiscal stimulus hopes were renewed after lawmakers suggested they were ready to resume talks on a virus aid deal, while President Trump said he was mulling a capital gains tax cut.  

A rise in Treasury yields and move off the lows in the dollar kept gold on the back foot as it struggled to rediscover its form that led to a record high last week, when it pierced through the psychologically important $2,000 level.

Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.

Still, the yellow metal is still up about 25% from the lows seen in March, though most of the rally was "almost solely attributable to robust investor demand, with all other demand components playing hardly any role," Commerzbank added. "It is understandable that investors now appear to be taking profits."

 

 

Gold Sinks Below $2,000; Analysts Warn Correction Could Continue
 

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Comments (26)
Silverbug 19
Silverbug 19 Aug 11, 2020 9:54PM ET
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Everything this article mentions is exactly why Gold is in overall bull market
Franco Dominguez
Franco Dominguez Aug 11, 2020 2:43PM ET
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americans trust in russians?. they are IDIOlogysTS
Large Father
Large Father Aug 11, 2020 2:27PM ET
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This makes no sense, more stimulus and weak USD should make gold price continue to move higher not lower? Speculation of a Russian vaccine? Trump “considering” cutting cap gains tax? Lol, all pie in the sky
Edward Chong
Edward Chong Aug 11, 2020 2:27PM ET
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oh welcome to the harsh reality of gold trading. this is how gold behaves.
Jonathan Frias
Jonathan Frias Aug 11, 2020 2:27PM ET
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Exactly my sentiments
Greg Brick
Greg Brick Aug 11, 2020 2:27PM ET
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Market is always moving before reallity. Now the numbers are in favor of expensive Gold but if the Russian vaccine is a reallity, investors are making a smart move : sell their position on Gold to buy stocks, still cheap on value sectors. Same paradigme as tech !
Rakesh Valecha
Rakesh Valecha Aug 11, 2020 2:21PM ET
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Gold and pharma are the two hot picks of moneymakers in these times..and the rally can not fizzle out ..it is just a correction..most of the money while going up is in the hands of bulls..the same bulls are bears for time being..u will come to know.. metals..pharma and precious anyyyything
juventus9999
juventus9999 Aug 11, 2020 2:19PM ET
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More fake news
Andrew carson
Andrew carson Aug 11, 2020 2:03PM ET
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There is no vaccine and what just last week infections were back on the rise.
Edward Chong
Edward Chong Aug 11, 2020 2:03PM ET
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did u not read about Russia story or u still in denial?
Revoluzsom Som e Iluminaçao
Revoluzsom Som e Iluminaçao Aug 11, 2020 1:56PM ET
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Já está em um ótimo ponto de compra...
Sol Weinberg
Sol Weinberg Aug 11, 2020 1:53PM ET
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The Fed cannot tighten monetary policy. Gov debt is too high to reverse course. Its clear sailing for gold bulls.
Jay Wiegman
Jay Wiegman Aug 11, 2020 1:53PM ET
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sure hope so. this bull put spread is not looking hot for me right now
Sol Weinberg
Sol Weinberg Aug 11, 2020 1:51PM ET
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shaking out the weak longs. Cov or not prices are gong much higher for gold. Fed CAN'T raise rates without blowing a hole in the budget deficit. LOL
Rodolfo Jara Muñoz
Rodolfo Jara Muñoz Aug 11, 2020 1:50PM ET
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good, a window to enter in gold... with the banks printing monet full time gold is always gonna win, sooner or later. so bitcoin and other "safe" assets.
Timothy Fortuin
Timothy Fortuin Aug 11, 2020 1:50PM ET
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how much does it cost to Start Trading
stu hf
stu hf Aug 11, 2020 1:46PM ET
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What is this for Trickery
Manish Saluja
Manish Saluja Aug 11, 2020 1:41PM ET
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gold will test 1850 before November
Bev Moer
Bev Moer Aug 11, 2020 1:02PM ET
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Anyone taken a long, hard look at the Fed's balance sheet lately?
Vahid Farahani
Vahid Farahani Aug 11, 2020 12:45PM ET
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GOLD is God's Money, and the king of all value and hedge assets. In depression, recession, and inflation its the only safe asset to go for.  DO NOT GIVE YOUR PHYSICAL GOLD AWAY, GOVERNMENT WANTS IT.  Be Wise,
Kalpesh Shah
Kalpesh Shah Aug 11, 2020 12:38PM ET
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gold will go back above 2000 this is false pull back insider trading
Ho DoKe
Ho DoKe Aug 11, 2020 12:36PM ET
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This is a good pull back. Over bought but the fundamentals are perfect for gold. Even with no virus I would be increasing my positions in gold. But yes a pull back to 1800 is possible with a target of 2100 easily by November election.
Alex Gaitan
Alex Gaitan Aug 11, 2020 12:22PM ET
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More fake news, GOLD to $2200 by end of month to beginning of September, no reason for Gold to drop, dollar will continue to get weaker and Putin's "vaccine approval" cant be trusted, not that fast! Realistically a genuine & safe vaccine wont be ready until Mid Year 2021. The markets are overvalued, an have been through an exhaustive run, they needs to cool off. Gold should be the only one running 📈💰
Koert Tulleners
Koert Tulleners Aug 11, 2020 12:21PM ET
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gold is finished man
Alex Gaitan
Alex Gaitan Aug 11, 2020 12:21PM ET
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Not even close to finished, we are just getting started, we are seeing a healthy pullback thats it, buy the dip or regret it later.
Fabio falec
falec Aug 11, 2020 12:21PM ET
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Ahahah, I am sure you are long in NDAQ, especially now that there is a Russian Vaccine. Not even Putin would bet in that! .... Oh by the way, I have just heard that there is a new vaccine developed in Zimbabwe!
Rodolfo Jara Muñoz
Rodolfo Jara Muñoz Aug 11, 2020 12:21PM ET
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Fabio falec when they discover that actually humans can´t cure even the most simple virus and whe only limit to treat the syntoms this *****is going down... the fact that they talk about "the cure" shows that only hope is leading this.
Mohammad Roshan
Mohammad Roshan Aug 11, 2020 11:48AM ET
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otw mc my acc
Lamberd William
Lamberd William Aug 11, 2020 11:46AM ET
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lol
Lamberd William
Lamberd William Aug 11, 2020 11:46AM ET
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it have burnt my money
Humble Tradesman
Humble Tradesman Aug 11, 2020 11:46AM ET
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lol
Lamberd William
Lamberd William Aug 11, 2020 11:46AM ET
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it have burnt my money
Jan Levinson
Jan Levinson Aug 11, 2020 11:37AM ET
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lol
 
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