Investing.com — Spot gold prices sank to a three-month low on Thursday, as the global oil benchmark surged and stoked worries over an energy-driven inflationary shock. A risk-off mood on Wall Street also led to traders shunning assets such as bullion and dollar for the safety of U.S. Treasuries.
The yellow metal has declined this week despite an easing in the greenback, as elevated oil prices have kept a lid on sentiment.
Spot gold dropped 2.8% to settle at $4,024.55/oz, its lowest level since July 20. Gold futures dipped 0.5% to settle at $4,039.90/oz.
“Gold has once again broken below intermediate support around $4,100. This is the third time this has happened this month, and previously the dips have been short-lived and bought into. The bulls will be hoping that recent history repeats. But hope is not a strategy. Bear in mind that this week’s selloffs in gold, and silver, have come despite a significant drop in the U.S. dollar,” David Morrison, senior market analyst at Trade Nation, said.
“Looking at the charts of gold and silver, the thing that stands out on both is that their respective daily MACDs have yet to pull back to the kind of oversold levels from which sharp, and sustainable rallies can develop,” he added.
Risk-off mood dominates
With this week’s U.S. economic calendar light and the Fed in a blackout period, the catalysts for gold were limited to moves in oil prices, the bond market, and on Wall Street. Friday was a classic risk-off session, with investors dumping high-growth communication services and technology stocks and flocking to the safety of defensive sectors and U.S. Treasuries.
The decline was led by elevated jitters around the massive amounts of debt being issued by companies to fuel their AI infrastructure buildouts. Meta Platforms, one of the premier AI hyperscalers, in its latest quarterly report indicated a slight rise in capital spending forecasts, while also announcing the establishment of a new class of nonvoting stock to raise capital for its AI ambitions.
“Gold fell $116 today, closing just above $4,000 support. Traders seem to be bracing for a tech wreck and an unwind of the leveraged AI trade. They may be right to expect that, but they’re wrong that gold will fall too. Gold already corrected. A stock market crash will be bullish,” Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, said.