Gold and silver exchange traded funds were set for additional losses Monday as investors sold precious metals to cover losses elsewhere in their portfolios amid the volatility in global stocks.
SPDR Gold Shares (NYSEArca: GLD) was down 0.5% in premarket trading while iShares Silver Trust (NYSEArca: SLV) slipped 5.7%.
Gold and silver ETFs fell sharply last week on deflation worries. The gold ETF is down 10% over the past month and the silver fund has dropped about 26%.
“Margin increases on gold and silver on Comex and the Shanghai Gold Exchange at the end of last week exacerbated the sell-off, forcing widespread liquidation of positions,” a trader told FastMarkets.
Gold prices briefly dipped below $1,600 an ounce on Monday morning.
“Gold is one of the few assets that remain in positive territory this year, in a sense it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed,” UBS said in a note, Bloomberg reported.
David Chojnacki, market technician at Street One Financial, said gold is approaching some key support levels in the long term gold bull run. The iShares Gold Trust (NYSEArca: IAU) is down nearly 13% from its Sept. 2 closing high.
iShares Gold Trust
Chart source: StockCharts.com.
Full disclosure: Tom Lydon’s clients own GLD and SLV.