Gold and Silver continue to correct – Commerzbank

The correction in Gold and Silver has continued at the start of the new trading week. The price of Gold lost more than 3% yesterday, slipping below the $4,000 per troy ounce mark for the first time in three weeks. Today, the price fell further to below $3,900, Commerzbank's commodity analyst Carsten Fritsch notes.

Gold and Silver ETFs see heavy outflows amid profit-taking

"In particular, news of a trade agreement between the US and China moving closer caused headwinds. This comes as no surprise, as the tariff conflict was a key driver of the rise in Gold prices this year. From its record high of $4,380, the price of Gold has now fallen by almost $500, or a good 11%. The price decline has been accompanied by heavy outflows from Gold ETFs, which according to Bloomberg have totaled 37 tons in the last four trading days, indicating profit-taking by investors."

"The Silver price fell by almost 5% yesterday and dropped to a low of USD 45.6 per troy ounce today, its lowest level since the end of September. Since reaching its record high, the Silver price has fallen by more than 16%. As a result, the Gold/Silver ratio has risen back to 85, from less than 80 two weeks ago. It is not unusual for Silver to follow Gold's price movements downwards disproportionately. During the previous rise, the price of Silver had also increased more strongly than Gold."

"The sharp price declines clearly show that the previous price rise in Gold and Silver was excessive. After all, the price of Gold had risen by more than 60% at times since the beginning of the year. The corresponding increase for Silver was a good 90%. The losses for Platinum were significantly lower than for Silver, with Platinum losing about as much as Gold from its recent 12½-year high. For Palladium, however, the decline from its 2½-year high is as sharp as for Silver. It is difficult to predict how long the correction will last. However, the majority of the decline is likely to have already materialised."