Gold is on pace for its biggest slide in 7 years as investors rush back to stocks and Treasurys

Michael Dalder/Reuters

  • Spot gold is set to post its biggest one-day crash since 2013 as investors dump the precious metal for risk assets.
  • The precious metal tumbled as much as 4.7%, to $1,932.28, in Tuesday trading. Futures for December delivery slid 3.9%, to $1,946, at intraday lows.
  • Stocks gained as investors rested optimism on falling US COVID hospitalizations and stimulus talks. Treasurys yields also jumped, further hitting gold’s relative value.
  • Many gold traders were “looking for an excuse to lock-in profits” and found a reason to sell in Russia’s coronavirus vaccine approval, Edward Moya, senior market analyst at OANDA, said in a note.
  • Watch gold trade live here. 

Spot gold is on track for its biggest single-day decline since 2013 as investors divert cash to risk assets.

Prices sank as much as 4.7%, to $1,932.28 per ounce, in Tuesday trading. Gold futures for December delivery tumbled 3.9%, to $1,946 per ounce, at intraday lows.

The precious metal is hot off a multi-week rally that saw prices soar above $2,000 per ounce to record highs. Yet risk appetites rebounded on Tuesday as US COVID hospitalizations dropped and investors maintained hopes for a second round of fiscal stimulus. Traders also cheered President Donald Trump’s Monday announcement that he is “seriously” considering a capital gains tax.

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Stocks jumped at the open on the collection of bullish drivers. Treasury yields gained ahead of a record US debt offering. Treasury market weakness typically boosts the value of non-yielding assets like gold.

Those who rode gold to new highs in recent weeks were “looking for an excuse to lock-in profits,” Edward Moya, senior market analyst at OANDA, said in a note. One such reason emerged early Tuesday when Russian President Vladimir Putin announced the country approved a coronavirus vaccine.

The news boosted stock futures before markets opened, but global experts largely took the announcement with a grain of salt. Russia approved the drug before beginning final trials, a step deemed necessary by most authorities to warrant approval.

Read more: Billionaire investor Paul Tudor Jones famously earned a 4-year streak of triple-digit returns. Here are the 7 trading rules he lives by after suffering a devastating loss.

Still, many gold traders “jumped all over Russia’s vaccine news” and prompted widespread selling, Moya said.

“It didn’t matter that this was somewhat telegraphed or that the Russians have only begun the Phase 3 trials,” the analyst said, adding “gold was ready for a selloff.”

Spot gold traded at $1,935.96 as of 1:15 p.m. ET Tuesday.

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