SPDR Gold Trust (NYSEArca: GLD) and other gold ETFs plummeted for the second straight session on Monday as the precious metal’s price dipped below $1,400 an ounce at one point.
Gold prices fell as much as 6% on Monday to under $1,400 for the first time in over two years.
“We are entering a phase of additional long liquidation by ETF investors and short-selling from hedge funds, which will continue in the foreseeable future,” Saxo Bank senior manager Ole Hansen said in a Reuters report.
Gold ETFs have also parted ways from the S&P 500 after exhibiting a close correlation with stocks for several months. Investors appear to moving away from gold as a safe haven and favoring stocks and hopes the global economy is improving.
The S&P 500 is up around 12% this year while gold prices have declined 10%, or over 20% from their record highs in 2011, writes Steven Russolillo for the Wall Street Journal. That was on Friday before Monday’s continued sell-off.
Looking at the chart of the SPDR Gold Trust (NYSEArca: GLD) compared to the S&P 500, the two moved more-or-less in tandem up till the end of 2012.
The latest move in gold prices has some worried. Michael Shaoul, chief executive of Marketfield Asset Management, points out that gold is dropping toward its 150-week moving average for the first time since 2008.