(Kitco News) – Precious metals are reeling along with the broader market on Monday morning as fears of a U.S. recession have set off a sharp slide in global equities.
After opening close to $2,440 per ounce, spot gold saw a double bounce at $2,420 as news of the collapse of Japanese equities hit the wires, causing crypto and other risk assets to drop sharply during overnight trading. Gold prices initially saw a rally off their lows, with spot rising to a session high just shy of $2,460 per ounce shortly after midnight EDT as investors fled to safety.
But as the panic spread through the Asian and European sessions, gold was dragged lower once again, and after failing to hold support at $2,420 per ounce, spot gold began its own collapse shortly after 6:30 a.m., falling $60 in two hours.
Spot gold bounced twice at the session low of $2,365 per ounce just after 8:30 a.m. EDT, and has since stabilized, last trading at $2,372.29 per ounce for a loss of 2.88% on the session.
Silver prices have fallen even more dramatically. After spot silver failed to hold the $28 support level just before 5:00 a.m. EDT, the gray metal saw its own sharp slide to a session low of $26.502 per ounce at the same time that gold was setting its daily lows.
Spot silver last traded at $26.677 per ounce for a loss of 6.58% on the daily chart.
Technical correction or economic collapse?
Traders and market experts were scrambling to put today’s events in context to understand whether this was a sharp but temporary technical correction, or the start of something much worse.
Another bloodbath,” wrote Nicky Shiels, metals strategist at MKS PAMP, who shared her thoughts about the implications for metals and the broader economy.
Another bloodbath. Some thoughts:
- "Cancel retirement": complete carnage and wealth destruction in global equities which is worrisome for Gold/Silver in the short-term. Fridays move in risk/equities was not an overreaction
- The butterfly effect: the fact that a mere 25bp hike… pic.twitter.com/15PVSNI2bw— Nicky Shiels (@nixsa84) August 5, 2024
“VIX in context: 3rd biggest crisis in history,” wrote Zerohedge in an X post, sharing the extreme activity on the volatility index.
Bloomberg noted that the U.S. yield curve has turned positive for the first time in over two years.
BREAKING: The US yield curve just turned positive for the first time since July 2022 https://t.co/PAWCxgotyl pic.twitter.com/gzMpsnvV6L
— Bloomberg (@business) August 5, 2024
And Jim Cramer proved that the ‘reverse Cramer’ indicator also works for shorter timeframes, as he posted the following comment mere minutes before gold’s own meltdown.
Remember this: gold held up a lot better than crypto...
— Jim Cramer (@jimcramer) August 5, 2024
