For the second time in three trading sessions, the Gold ETF (GLD) demonstrated weakness. GLD stock fell by 6.43%, a drop not seen in over a decade (the year 2013). Speculators reasoned that gold’s rally was due for a bounce. However, a rule change triggered the drop.
CME Group set a performance bond requirement for gold. It increased margin requirements for several commodities. This is a likely catalyst that would shake out the weak hands.
Gold miners slumped on Tuesday. Kinross Gold (KGC) shares lost 11%. Newmont (NEM) dropped by 9%, while Barrick Mining (B) fell by 9.3%.
US Dollar Rose Slightly
Investors cannot attribute the gold rally to the slight uptick in the U.S. dollar. The USD bullish dollar index fund (UUP) rose by 40 basis points yesterday. That increase was not strong enough to explain gold’s fall.
Bitcoin (BTC-USD) fell slightly but is up 1.77% in the last week. YTD, BTC prices are up by 17.8%.
Bullish on Gold
Gold investors need not panic just yet. The pullback is healthy as speculators exit their position. The U.S. currency is no longer appealing for settling most international trades. Trade partners are hesitant to strike firm deals when tariff rates keep changing. They prefer to consider gold or cryptocurrency as a means to back the trade.
