Gold exchange traded funds joined global stocks in the red Monday amid reports traders were selling the precious metal to meet margin calls as equities tank.
Gold fell as investors unloaded holdings to raise cash and cover losses elsewhere in their portfolios, Reuters reported.
“Gold is held as part of a wider portfolio of assets, so when you see blanket selling of equities, then gold will come down at the same time,” Standard Chartered analyst Dan Smith said in the report. “Having said that, of course, it has tended to do well on worries about Europe and currency strength, but the wider picture needs to be taken into account, so that is why gold is struggling at these higher levels.”
SPDR Gold Shares (NYSEArca: GLD) was down 1.1% in Monday’s premarket. [A Look at the World’s Largest Gold ETF]
“The margin clerks will be sharpening their knives today and will take dead aim even upon gold if that is where they think they can find liquidity,” Dennis Gartman wrote in a daily newsletter, according to Bloomberg.