The price of gold suffers its biggest daily drop in four years

The price of gold posted its biggest daily drop in four years, after weeks of rapid gains that pushed technical indicators to levels that look stressful. The price of an ounce of gold fell 3.8%, after hitting a new high of $4,381 an ounce on Monday. Technical indicators, including the relative strength index, indicate that the strong bull run that began in August may have reached high overbought levels. The rise of the dollar since the beginning of the week has also led to an increase in the cost of precious metals for most buyers. Safe haven demand has eased relatively as US President Donald Trump and his Chinese counterpart Xi Jinping prepare to hold a meeting next week to resolve trade disputes between the two countries, in addition to the end of the seasonal buying season in India. Gold’s bullish wave faces a test of resilience. Ole Hansen, commodity strategist at Saxo Bank, said: “During the past few sessions, traders have started to flounder, with increasing fears of a correction or a phase of sideways movement,” adding: “In periods of correction, it becomes clear how strong the real market is, and this time will be no different, as latent demand is likely to lead to a cap.” “of any significant decrease.” Investing amid the absence of data In light of the ongoing government shutdown in the United States, commodity traders have been deprived of one of their most important tools, which is the weekly report issued by the US Commodity Futures Trading Commission (CFTC), which shows the positions of hedge funds and money managers in gold and silver futures contracts. In the absence of this data, speculators may be more inclined to build excessive positions in one direction or another. Hansen added: “The absence of position data comes at a critical time, with the possibility of a build-up of speculative buying positions in both metals, making them more vulnerable to a correction.” Deutsche Bank: Central banks can hold large amounts of gold and Bitcoin at this time. Fluctuations in the prices of precious metals have risen sharply in recent days, as traders try to hedge against any possible decline in other sectors of their investment portfolios, or to profit from falling prices. The number of traded options contracts linked to the world’s largest gold-backed ETF exceeded two million contracts last Thursday and Friday, surpassing the previous record. Silver falls after a historic rise. The price of silver also fell after rising about 80% since the start of the year, driven by macroeconomic factors similar to those supporting gold, in addition to a historic deficit on the London Stock Exchange. Benchmark prices outperformed New York futures, prompting traders to send the metal to the British capital to ease supply shortages. Silver warehouses linked to the Shanghai Futures Exchange also saw their biggest daily outflows since February, while stocks in New York also fell. The price of gold fell 3.4% to $4,208 an ounce by 2:21 p.m. in London, while silver fell 5.1% to $49.78 an ounce after falling as much as 6.2% during the session.