Gold prices fell sharply on Thursday, drifting away from a record peak hit earlier this week, as a slump in US GDP and President Donald Trump’s tweet about delaying the upcoming US elections triggered a sell-off in financial markets.
Spot gold dipped 1.2% to $1,947.28 per ounce by 11:54 a.m. EDT (1554 GMT), while US gold futures slid 0.7% to $1,940.2.
“People are panicking and fleeing the equity markets and you’re seeing that weighing on metals prices,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
A historic plunge in second-quarter GDP and a tweet by President Donald Trump raising the possibility of delaying the US November presidential elections weighed on US stocks and Treasury yields.
Bullion was also pressured as the dollar stalled its slide after the US Federal Reserve said it remains committed to keeping interest rates near zero as long as necessary for the economy to recover.
“The Fed didn’t really lay out a specific roadmap as far as how to get us all the way back up, they just said they would be accommodative,” Streible added.
The non-yielding metal, which benefits from low interest rates, jumped to a record high of $1,980.57 per ounce on Tuesday and is up over 28% so far this year, supported by strong investment demand.
“We’ve seen gold’s positioning has started to bloat not only from the institutional side, but more recently we have really seen a surge in retail flows,” said Daniel Ghali, commodity strategist at TD Securities.
“So that’s really assigned to speculative frenzy taking place in gold at the moment … we are expecting a period of consolidation here before gold continues to rally later in the year.”
Other metals were also lower, with silver shedding about 5% to stand at $23.19 per ounce, platinum was down 3.6% at $891.33 and palladium dropped 3.8% to $2,075.55.