Asian shares fall under pressure from a wave of selling in shares of precious metals companies

Gold and silver prices showed signs of relative stability after the sharp crash the market saw in previous sessions, while Asian stocks fell after a weak performance on Wall Street. Gold fell 0.3% after losing as much as 2.9% in early Asian trade, after posting its biggest daily drop in more than 12 years on Tuesday. As for silver, it rose slightly after a loss of 7.1% in the previous session. The Asian stock index fell 0.5% as markets in the region were hit by a wave of selling in shares of precious metals companies from Australia to Indonesia and China, after the US S&P 500 index closed flat on Tuesday. The dollar and US Treasuries were largely stable, while the Japanese yen recorded a slight increase. Technical selling more than an economic shock. Charo Chanana, chief investment strategist at Saxo Markets, said: “The wave of selling in metals looks more like a process of liquidation of financial positions, rather than a total economic shock,” adding that traders are still on the lookout for “any indications of systematic selling activity across assets,” such as wider credit spreads and a rise in the dollar. The increased focus on precious metals comes after the rapid rise in gold and silver prices earlier this year, driven by central bank purchases and fears of difficult financial conditions in advanced economies. The recent declines also came after technical indicators showed that the strong upward wave had been exaggerated. The continuing impact of the US government shutdown Although investors have recently reduced risks due to concerns about trade and credit, exposure to stocks with global hedge funds and long investment strategies remains at the highest level in more than a year, according to Barclays estimates. Piper Sandler’s Craig Johnson said: “Our short-term technical expectations suggest that stocks will experience a period of consolidation or correction in the coming weeks. We see these declines as healthy and necessary.” With the ongoing government shutdown in the United States, which is close to becoming the second-longest in history, investors are facing a dearth of official economic data, including September inflation figures to be released on Friday. The shutdown deprived commodity traders of a key weekly report issued by the Commodity Futures Trading Commission on the positions of hedge funds and investors in US gold and silver contracts. “We assume that the size of positions in the metals market increased to significant levels, which ultimately led to a sell-off,” ANZ Group analysts Brian Martin and Daniel Haynes wrote in a note. “Despite this correction, we continue to see the longer-term factors supporting prices.” Trump talks possible deal with China Trade tensions remain the focus of attention, after US President Donald Trump expected his upcoming meetings with his Chinese counterpart Xi Jinping to lead to a “good deal”, despite acknowledging that these anticipated talks may not take place anytime soon. Oil prices rose after an industry report indicated that US crude inventories fell for the first time in four weeks, at a time when Trump repeated his claim that India would reduce its imports of Russian energy. In Japan, Prime Minister Sanae Takaishi ordered the preparation of a new economic package aimed at softening the effects of inflation on families and companies, while the country’s exports recorded their first rise in five months thanks to increased shipments of electronic chips and electronic parts, despite the continued decline in exports destined for the United States. In debt markets, Indonesia plans to issue its first external yuan-denominated bonds, joining a wave of issuances that have pushed the volume of dime bonds to a record level this year.