This article was published on August 5th, 2024.

Gold futures fell Monday but pared some of their early losses, as the metal was swept up in the broad global market selloff driven by mounting economic concerns, although analysts generally see the drop as a temporary correction for the safe-haven investment.

Front-month Comex gold (XAUUSD:CUR) for August delivery ended -1% to $2,401.70/oz, its lowest settlement value since a week ago, while front-month August silver (XAGUSD:CUR) closed -4.1% to $27.076/oz, its lowest settlement since May 3, and August Comex copper (HG1:COM) finished -2.4% to $3.984/lb, its weakest closing value since March 12.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ), (COPX), (CPER), (OTC:JJCTF)

Despite the sharp drop, gold is still up by ~16% YTD and hit an all-time high in July, aided by central bank buying and Asian consumers.

Gold succumbed to selling selling pressure as investors took profits despite a generally supportive environment for gold to rally higher, but gold's decline might be temporary as the metal maintains strong fundamental benefits, DHF Capital's Bas Kooijman told Dow Jones.

Bullion stands to gain from safe-haven demand, heightened geopolitical tensions and a deteriorating U.S. jobs market prompting bets for more interest rate cuts, although global economic concerns, particularly over weakness in China, are weighing on sentiment, Kooijman said.

Margin calls ahead of this morning's market open forced traders to liquidate winning positions in gold to cover their losses on stocks, BullionVault research director Adrian Ash told Bloomberg, adding it is common for gold to drop in a stock market plunge, "but it falls less and from higher ground before finding its floor sooner."

Virtually every time there is marked equities weakness, Investors who hold gold as a risk hedge will liquidate part of their holdings "virtually every time there is marked equities weakness" in order to raise liquidity against any potential margin calls, StoneX Financial analyst Rhona O'Connell told Bloomberg, and "when the dust settles, they almost invariably buy it back."

Source: Seeking Alpha