Source: Jin10 Data

On Monday, as traders assessed the global stock market crash and the escalation of tensions in the Middle East, gold fluctuated and fell below $2,390/ounce for the first time since July 30, plunging 2% during the day and falling more than $68 from its high. Spot silver lost the $27 mark, the first time since May 6, plummeting 6% during the day.

While analysts say that gold's safe-haven appeal remains strong as concerns about a U.S. recession intensify and Israel prepares to respond to potential retaliation from Iran, gold bulls are still liquidating positions in the broader stock market sell-off.

Global stocks continued to plummet on Monday, with the Nikkei setting its biggest single-day decline since October 1987, as concerns about a U.S. recession prompted investors to sell risky assets. Friday's data showed that the U.S. unemployment rate rose to 4.3 percent in July, increasing the likelihood that the Fed will cut interest rates by up to 50 basis points in September.

Adrian Ash, research director at Bullionvault, said, "There is an old saying that all correlations converge in a crash, and there is some truth to that. And as traders need to unwind profitable positions to cover additional margin on other assets, gold's volatility perfectly reflects the level of panic in the stock market."

Rhona O'Connell, analyst at StoneX, pointed out, "Whenever there is obvious weakness in the stock market, investors who view gold as a risk hedge will liquidate some of their gold holdings to meet potential margin calls. After the storm has passed, they almost always buy gold again."

She added, "(Gold) may face resistance at the historic high of $2,484, but geopolitical tensions and concerns about whether the Fed is behind the curve are supportive of gold."

Ole Hansen, head of commodity strategy at Saxo Bank, said, "In the short term, the need to cut risk exposure may outweigh anything else." Nonetheless, he remains "bullish on gold," citing supportive factors such as the plunge in the U.S. 10-year Treasury notes yield, the weakening U.S. dollar, geopolitical factors, and the market's pricing of the Fed's rate cut prospects.

Gold has risen more than 15% this year, thanks to purchases by central banks and Asian consumers, as well as market expectations that the Fed will cut interest rates in the coming months.

As for other precious metals, spot platinum fell and palladium fell by 4%. Auto manufacturers use these two metals to reduce emissions in engine exhaust.

O'Connell adds that both metals are under pressure due to the long-term risks associated with net-zero emissions, but a large number of short positions will eventually be liquidated, so they are likely to reach around $1,000.

Editor / jayden