Gold Turns Into an ATM, Plunges Nearly 9% in a Single Day, Turns Negative Returns This Year

Gold spot prices briefly dropped to $4,100 today, a nearly 9% plunge in a single day, marking the ninth consecutive trading day of decline and turning this year into a negative return. Amid widespread asset declines, investors are selling gold for cash or to cover losses in other sectors, making gold the best ATM for investors.

Gold becomes an ATM, nearly 9% drop in one day

Tensions between the US and Iran have escalated again. Trump’s ultimatum to block the Strait of Hormuz has triggered panic in financial markets, causing Asian stock markets to plummet across the board. The KOSPI index in South Korea even triggered a trading halt.

(Week four of Middle East conflict: Gold and silver market value evaporates by $2 trillion in three hours, KOSPI halts again)

Gold spot prices briefly fell to $4,100 in the afternoon today, a nearly 9% crash in a single day, marking the ninth consecutive trading day of decline and turning this year into a negative return.

Since the outbreak of war on February 28, gold has risen from $5,230 to over $5,500 at one point, but then entered a long three-week decline. Besides the surge in oil prices causing inflation concerns, the strengthening dollar has been a main factor in gold’s retreat. On another level, amid a broad decline in assets, investors are selling gold to offset losses elsewhere, turning gold into an ATM.

Gold faces liquidity crisis, entering oversold territory

Johan Jooste, CEO of Pangaea Wealth AG, directly stated: “Gold has liquidity issues.” Jooste pointed out that this rapid sell-off is driven by investors’ need to raise funds. If the war continues to escalate, gold prices could face further downside risks.

David Wilson, Head of Commodities Strategy at BNP Paribas in Paris, said that gold’s reaction to current macroeconomic shocks “has clear market precedents.” He noted: “Looking back at the previous three economic shock cycles, including 2008, 2020, and 2022, gold initially declined due to market reactions, as investors typically sell assets to hold dollars.”

Reviewing the outbreak of the Russia-Ukraine war in 2022, gold experienced a seven-month downward trend.

(Weekly gold price down 8%, referencing Russia-Ukraine war, will gold continue to fall?)

The 14-day Relative Strength Index (RSI), which measures momentum, has fallen below 30. Some traders believe this level indicates that gold has entered oversold territory.

This article, “Gold becomes an ATM, nearly 9% crash in one day, turning this year into a negative return,” was first published by Chain News ABMedia.