Gold Edges Up After Sharp Drop As Trump Injects Caution Into China Trade Deal: 'Maybe ... Won’t Happen'

• Spot gold prices ticked up to about $4,140 per ounce after recording the biggest fall since August 2020 in the earlier session.
• On Tuesday, Trump sounded cautious over a trade deal with China.
• Gold bull Peter Schiff said the recent dip in mining stocks presented a great buying opportunity.

Gold prices rose on Wednesday, following their worst decline in over five years, as concerns about a trade truce between the U.S. and China resurfaced.

Spot gold prices ticked up to about $4,140 per ounce after recording the biggest fall since August 2020 in the earlier session. Bullion has been on a nine-week rally, aided by geopolitical tensions, central bank buying, and robust retail participation.

Tuesday’s declines in gold prices also sharply pulled back mining stocks, with Newmont, the world’s biggest gold miner, logging a drop of over 9%, making it the worst-performing stock in the S&P 500 for the day. The VanEck Gold Miners ETF also tumbled over 9%.

What Caused Bullion's Decline?

The plunge in gold prices followed U.S. President Donald Trump's statement on Monday that he expected to reach a fair trade deal with Chinese President Xi Jinping, while also downplaying concerns over differences in their views on Taiwan.

“The unwind follows a spectacular rally (almost $1,000 in two months) driven by FOMO that pushed gold into extreme overbought territory, leaving it vulnerable to a sharp snap back,” IG analyst Tony Sycamore said.

However, on Tuesday, Trump sounded cautious over a trade deal with China. "I think we're going to have a very successful meeting. Certainly, there are a lot of people that are waiting for it," Trump said about his upcoming meeting with Xi in South Korea. "Maybe it won't happen. Things can happen where, for instance, maybe somebody will say, 'I don't want to meet. It's too nasty'. But it's really not nasty."

What Is Retail Thinking?

Retail sentiment on Stocktwits about the SPDR Gold Shares ETF and VanEck Gold Miners ETF was in the ‘bullish’ territory at the time of writing.

“Unlike equities, which can collapse when profits fall or investor sentiment shifts, $GLD value is rooted in its scarcity, universal acceptance, and role as a hedge against currency debasement,” one user wrote.

“Miners' earnings are going to be too good as they are expected to report sky-high earnings as per all analysts,” another user wrote before adding that the dip was a ‘golden opportunity to buy.’

Schiff Says Volatility Is ‘Just Noise’

Echoing most of the retail traders, Peter Schiff, a renowned gold bull, said that underlying fundamentals may not back the volatility in mining stocks. “This volatility is just noise and it's actually irrelevant to mining companies' profits, which will skyrocket despite this morning's sharp sell off, even if it's not reversed, which it likely will be anyway,” he said.

Also See: Halliburton Stock Surges Most In Over 6 Months On AI Data Center Push, Upbeat Q3 Earnings

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Share

·

Add us on