Gold moves higher after suffering its biggest one-day crash since 2013
- On Tuesday, spot gold suffered its biggest one-day crash since 2013 as investors dump the precious metal for risk assets.
- The precious metal tumbled 5% to $1,910 in Tuesday trading. On Wednesday morning, gold recovered somewhat.
- Many gold traders were "looking for an excuse to lock-in profits" and found a reason to sell in Russia's coronavirus vaccine approval, Edward Moya, senior market analyst at OANDA, said in a note.
- Watch gold trade live here.
Spot gold recovered somewhat on Wednesday morning after suffering its biggest single-day decline since 2013 as investors divert cash to risk assets.
Prices sank as much as 5%, to $1,910 per ounce, in Tuesday trading.
The precious metal is hot off a multi-week rally that saw prices soar above $2,000 per ounce to record highs. Yet risk appetites rebounded on Tuesday as US Covid hospitalisations dropped and investors maintained hopes for a second round of fiscal stimulus. Traders also cheered President Donald Trump's Monday announcement that he is "seriously" considering a capital gains tax.
Treasury yields gained ahead of a record US debt offering. Treasury market weakness typically boosts the value of non-yielding assets like gold.
Those who rode gold to new highs in recent weeks were "looking for an excuse to lock-in profits," Edward Moya, senior market analyst at OANDA, said in a note. One such reason emerged early Tuesday when Russian President Vladimir Putin announced the country approved a coronavirus vaccine.
The news boosted stock futures before markets opened, but global experts largely took the announcement with a grain of salt. Russia approved the drug before beginning final trials, a step deemed necessary by most authorities to warrant approval.
Still, many gold traders "jumped all over Russia's vaccine news" and prompted widespread selling, Moya said.
"It didn't matter that this was somewhat telegraphed or that the Russians have only begun the Phase 3 trials," the analyst said, adding "gold was ready for a selloff."
On Wednesday morning, spot gold recovered by more than a percent to $1,933.
(Original reporting by Ben Winck, prices updated by Business Insider SA team.)
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