The SPDR Gold Shares ETF (GLD) experienced a sharp intraday decline of 8.61% on Friday, reflecting a significant sell-off in the popular gold investment vehicle. The downturn occurred during regular trading hours, marking a notable reversal following a historic rally that had pushed gold prices to record highs earlier in the week.
The sudden plunge was driven primarily by aggressive profit-taking from investors after gold's parabolic surge in January. Additionally, reports that former Federal Reserve Governor Kevin Warsh was the expected nominee to become the next Fed Chair boosted the U.S. dollar, making dollar-denominated gold more expensive for holders of other currencies. Market participants interpreted Warsh's potential appointment as signaling a potentially less aggressive approach to monetary easing, which diminished gold's appeal as a hedge against currency debasement.
Further pressure came from prominent warnings about a gold bubble, with Ark Invest's Cathie Wood stating that the real bubble was in gold, not artificial intelligence, and that a rising U.S. dollar could pop it. The combination of extreme overbought conditions, speculative positioning, and shifting expectations for U.S. monetary policy triggered the sharp correction, reminding traders that precious metals remain volatile, two-way markets.
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