Gold steadied after falling below $4,000 an ounce in the previous session, while silver extended losses as investors took profits following a rally that sent prices to the highest since 1980.
Bullion traded near $3,980 an ounce yesterday, after losing 1.6 per cent in the previous session. Technical gauges show the precious metal has been in overbought territory for much of the past month, prompting some investors to lock in gains after a rapid four-day winning streak that pushed prices to a record high of $4,059.31 an ounce on Wednesday.
Silver also pulled back after touching $51.235 an ounce on Thursday – the highest in more than four decades. The metal is still up about 70pc this year, easily outpacing gold’s advance. The rally is part of a broadening interest in precious metals, fuelled by fears of an overheating equities market, fiscal pressures in the US and threats to the Federal Reserve’s independence.
The selloff coincided with Thursday’s slide in US equities. While gold is often viewed as a haven during market turmoil, it can drop alongside risk assets when investors liquidate positions to cover losses elsewhere. Nevertheless, bullion is still on track for an eighth weekly advance.
“Gold, silver, crypto, and much of the S&P 500 all moved as one through US trade – albeit with varied betas – as the technical picture showed evidence of the heat coming out of the move,” Chris Weston, head of research at Pepperstone Group Ltd, said in a note. “The strong momentum that had delivered new highs day after day gave way, with some traders keen to reduce exposure from extended positions and lock in performance.”
Precious metals have gained momentum as part of the so-called “debasement trade”, in which investors flock to the perceived safety of Bitcoin, gold and silver while pulling away from major currencies like the dollar. Concerns the value of financial securities will be eroded by inflation and unsustainable fiscal deficits is boosting their appeal.
Spot gold was steady at $3,987.04 an ounce in Singapore.
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