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The price of gold drops by more than 1% as the larger market collapses.

The price of gold drops by more than 1% as the larger market collapses.

Yesterday, the drop in gold prices was more than 1% as the commodity got caught up in a larger, worldwide market sell-off sparked by growing economic worries.

Spot gold experienced its largest one-day decline since early June, plunging as much as 3.2% to $2,365.55 per ounce. It made up half of the loss by 12:55 p.m. ET, reaching $2,403.37 per ounce.

US gold futures had a 1.0% decline as well, closing in New York at $2,445.10 an ounce, but they stayed above $2,400 for the duration of the day.

Bullion, which is frequently regarded as a safe haven during difficult times, has seen strong support due to increased geopolitical tensions in the Middle East and expectations of rate reduction by the US Federal Reserve.

However, pressure on holdings from the global stock market selloff, which was sparked by worries that the US may enter a recession after bad economic data last week, eclipsed those optimistic considerations on Monday.

Gold typically declines along with stocks during a stock market meltdown, he said, “but it falls less and from higher ground before finding its floor sooner.”

Analysts, however, think that given the ongoing political and economic unpredictability and the likelihood of interest rate decreases, which should be good news for zero-yield bullion, the precious metal may find its footing again.

According to Rhona O’Connell, an analyst at StoneX Financial, “investors who hold gold as a risk hedge will virtually always liquidate part of their holdings to raise liquidity against any potential margin calls.” This is true whenever there is noticeable downturn in the equity market.

Sources

(“Gold Price Falls over 1% as Wider Market Crash Spills Over,” 2024)

Bloomberg

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