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Gold Tumbles 5% as Correction Continues

CommoditiesAug 11, 2020 05:06PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com -- Gold plunged more than 5% 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 5:00 PM ET (2100 GMT), gold was down $108, or 5.35%, to $1,921.65, its 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) (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 Tumbles 5% as Correction Continues
 

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Comments (24)
Labu Labu
Labu Labu Aug 12, 2020 4:20AM ET
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stop freaking out, my precious
Pwr Strk
Pwr Strk Aug 12, 2020 2:55AM ET
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paper gold is just another stock
Peemil Nicho
Peemil Nicho Aug 11, 2020 9:00PM ET
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many people in my country sold their physical gold and gold shop close to avoid collaps becuase gold shop dont have money to buy back so every body talk about gold price and plan to sold all own and think too expensive and dont tink to buy back from that price
Peemil Nicho
Peemil Nicho Aug 11, 2020 9:00PM ET
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gold up from covid problem both rising from covid case and financial problem from it so if gold will go up again the future problem should severe more than covid ,second wave will occure but will not much more severe than fisrt wave becasue we have experience.
Michael Brennick
Michael Brennick Aug 11, 2020 9:00PM ET
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what
Leo sugiarto TV
Leo sugiarto TV Aug 11, 2020 8:01PM ET
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if covid become the reason of falling gold, first time covid entereng US, what i remember gold is on around 1500-1600, , ,
Leo sugiarto TV
Leo sugiarto TV Aug 11, 2020 8:01PM ET
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i think maybe 1550 is the bottom right now
Chris Marshall
Chris Marshall Aug 11, 2020 8:01PM ET
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Thats ludicrous. The economy is in shambles. This is just new money to gold that has jumped out. Think it will be upticking again before months end and not anywhere near $1550
Lois Edelman
Lois Edelman Aug 11, 2020 7:27PM ET
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I'm a jeweler (part time, custom pieces) it's good news
Lois Edelman
Lois Edelman Aug 11, 2020 7:25PM ET
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what
Brady Murray
Brady Murray Aug 11, 2020 6:39PM ET
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Added to position today. will add more on further weakness as global ********"leaders" wreck their economy and their currencies. Gold will rise. 2500 by Sept 21. 3000 with Dem win and market crash. Load it up.
Adam Bonsall
Adam Bonsall Aug 11, 2020 6:39PM ET
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Dem win. Doubtful.
jj mm
jj mm Aug 11, 2020 6:00PM ET
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don't worry guys. gold will.go.up sooner or later.
Sadist Vodka
Sadist Vodka Aug 11, 2020 5:24PM ET
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when do you think xauusd will hit 1800?
John Stowell
John Stowell Aug 11, 2020 4:22PM ET
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New record high and nearly doubled in less than 5 years and so many are fearing a crash. I'd be more fearful if it didn't pullback and consolidate for another leg up. Anyone watching miners the last few days could see this coming. I believe this bull will keep running.
Edward Chong
Edward Chong Aug 11, 2020 4:22PM ET
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yeap it will be fearful without a correction. but 1900 have to really really hold. ignore the charts it doesn't work anymore.
John Cena
John Cena Aug 11, 2020 3:37PM ET
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more than double
Bulls MakeMore
Bulls MakeMore Aug 11, 2020 3:27PM ET
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I knew gold was toast
Edward Chong
Edward Chong Aug 11, 2020 3:27PM ET
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haha u why didnt u say that for the Last 60 days?
Sol Wein
Sol Wein Aug 11, 2020 3:27PM ET
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Gold goes from 1075 at the low of the move to over 2080 and it corrects $120 and you think gold is toast?
Terence Williams
Terence Williams Aug 11, 2020 3:16PM ET
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Is anyone surprised that gold is down..not really. Yet the resurgence of gold buying is also a lack of confidence in the dollar. I expect the move today will be a blip, and the further covid spending will increase short term. The election drama will also be more apparent and will be reflected in gold pricing.
Zoidze Michael
Zoidze Michael Aug 11, 2020 3:15PM ET
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JNJ ANY NEWS PLA
Gondai Siwela
Gondai Siwela Aug 11, 2020 2:41PM ET
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It was over bought. simple
Mohammed Zahir
Mohammed Zahir Aug 11, 2020 2:38PM ET
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Will it be double by 2025?
YC LL
YC LL Aug 11, 2020 2:38PM ET
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think it will double this year
Bo Helldén
Bo Helldén Aug 11, 2020 2:37PM ET
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It is obviously because of Putin’s so-called Sputnik-5 vaccine. Which is a complete joke! Untested vaccine! Not something I woul dream of taking!
Mark West
Mark West Aug 11, 2020 2:37PM ET
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From the makers of Novichok...
فائز ادم حسن
فائز ادم حسن Aug 11, 2020 2:37PM ET
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I things may bush back more than 2000 onze in last week
Jay Wiegman
Jay Wiegman Aug 11, 2020 2:35PM ET
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looks like i'll be rollling out my bull put spread for awhile lol
Matheus Martinelli
Matheus Martinelli Aug 11, 2020 2:32PM ET
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Correction??? Never!!!!!! Keep an eye on indices in the next days
AJSA AngryRant
AJSA AngryRant Aug 11, 2020 2:32PM ET
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Dude, accept the fate. Gold already massively drop today.
Rodolfo Jara Muñoz
Rodolfo Jara Muñoz Aug 11, 2020 2:32PM ET
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AJSA AngryRant a good point entrance, accept the fate, with the FED and the central banks giving money away for free, the tendency of gold will continue. Market corrections are a good thing, for example the money i made ditching overvaluated stocks now goes to gold with this awesome window of oportunity
Matheus Martinelli
Matheus Martinelli Aug 11, 2020 2:32PM ET
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AJSA AngryRant  I know, and I still think it will fall a lot. I'm talking about the fact that the American indices may go down someday!
Lavetty Tshabalala
Lavetty Tshabalala Aug 11, 2020 2:32PM ET
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I agree with you. I also think that Gold will keep on falling. Perhaps up until next week or so.
Erik Myers
Erik Myers Aug 11, 2020 2:31PM ET
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It'll drop to $1,800 and then push back to above $2,000. This will be the average rate till after election season.
Yankee Steve
Yankee Steve Aug 11, 2020 2:31PM ET
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They are trying to smash it
Ray Tovmasyan
Ray Tovmasyan Aug 11, 2020 2:31PM ET
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This is not a correction! There’s no need for gold to be that high!
Yankee Steve
Yankee Steve Aug 11, 2020 2:31PM ET
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Tell it to the fiat currency printer they can print more
Peter Straka
Peter Straka Aug 11, 2020 2:30PM ET
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"Correction", this is insane a drop this fast
Plopseven Schwartz
Plopseven Schwartz Aug 11, 2020 2:30PM ET
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It’s smart money knowing there will be no more stimulus. IE: dollar index rises / PM down
Rodolfo Jara Muñoz
Rodolfo Jara Muñoz Aug 11, 2020 2:30PM ET
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a 10% correction is pretty common, specially in this times.
Bev Moer
Bev Moer Aug 11, 2020 2:30PM ET
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Maybe, but the Fed balance sheet is massive, and govt. deficits are permanent now. No one can dare cut spending. So, printing it is...
 
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