Gold experienced a decline of over 1% on Monday, influenced by a broader market downturn worldwide prompted by escalating economic anxieties, despite analysts predicting this to be a short-term adjustment for the safe-haven asset. By 11:58 a.m. ET (1558 GMT), spot gold had dropped 1.6% to $2,403.39 per ounce, while U.S. gold futures saw a 1% decrease to $2,444.10. Spot silver also fell, dropping 4.9% to $27.15. Wall Street faced significant losses as concerns about a potential U.S. recession, sparked by disappointing economic figures from the previous week, spread across global markets.
"Investors are panicking and are offloading assets, including gold and silver," noted Jim Wycoff, a senior analyst at Kitco Metals. The sell-off extended to autocatalyst metals platinum and palladium, reflecting heightened worries about industrial demand. Platinum declined 4.4% to $916.05, and palladium dropped 3.4% to $859.25, reaching its lowest point since August 2018. These metals are utilized in engine exhaust systems to minimize emissions.
Although gold is traditionally viewed as a secure investment during such volatile times, it was not spared from Monday's widespread asset sell-off. Conversely, Treasury bonds saw increased demand, with U.S. 10-year yields hitting their lowest levels since mid-2023 following a dismal July payrolls report that intensified recession fears. However, analysts believe that gold, which has surged over 16% this year, may recover its position in the future due to ongoing economic and political uncertainties, as well as anticipated interest rate reductions by the Federal Reserve, which should benefit the non-yielding bullion.
Market expectations now point to a potential 50 basis point cut by the central bank at the September meeting. "Heightened geopolitical tensions and recent expectations for more substantial Fed rate cuts should foster favorable conditions for bullion. Ultimately, gold is likely to set a new record high once market nerves calm," commented Han Tan, the chief market analyst at Exinity Group.
