r/investing • u/bpheazye • 1d ago

Why has gold stalled out the last couple of days?

Gold was on a pretty good run as the market has been on a steady fall. Now, with the tariff announcement, the market is falling off a cliff but gold is also slightly down.

I can't understand why this would make sense. Are people not looking to hedge with gold right now as they pull back?

40 Upvotes

78% Upvoted

40 comments sorted by

78

u/Decent-Box-1859 1d ago

Everything falls during margin calls.

8

u/HawaiiStockguy 1d ago

Wow. I think that you are right

7

u/Aurorion 1d ago

What I am wondering is why Bitcoin has been rock steady. I would have expected the drop in Bitcoin to be at least 2x of that in SPX. Is Bitcoin finally becoming the ultimate safe haven asset as many believers have predicted?

3

u/Mikerk 20h ago

Down 24% from ATH. Sp500 is down like 18%?

I think it took the first hit is all, but I'm not sure if it's done taking hits or not

2

u/Aurorion 20h ago

Sure it's down from it's earlier ATH - but it dropped earlier, when equities had not dropped too much. And now when just about everything got hammered in the past couple of days, it barely moved an inch. That's great, and definitely unexpected.

Bitcoin has always been a high return asset class - volatility and high drawdowns have always been a cost for these high returns. And it has exhibited high correlation with equity, somewhat diluting its appeal. But if it continues to show low correlation with equity? That would greatly enhance its value in a diversified portfolio.

2

u/Decent-Box-1859 19h ago

Gold is mostly held by institutions; Bitcoin by retail traders. Retail traders were buying the dip on Friday (which is why GameStop was also up). Institutions were slowly selling off their positions.

I don't think this sell-off is done yet; let's revisit in 3-6 months.

5

u/bpheazye 1d ago

Interesting. Is their a reason why or thats just how it happens?

34

u/Decent-Box-1859 1d ago

With a margin call, people sell whatever they can sell to cover-- which often means selling assets that are performing well. It's how leverage works in the system. I've seen this happen before.

6

u/Fun-Sundae4060 1d ago

Do you see the chart for gold? It’s been running up like crazy, then it went UP and away from the trendline. Twice.

Price for gold is going up so fast which is obviously unsustainable. It was overdue for a pullback. I believe it will still go up after a correction though

4

u/movdqa 1d ago

People have to deposit money or liquidate positions. So you sell your good stuff to deal with the margin calls.

1

u/Background_Pause34 1d ago

Is there anyway to view data on margin calls to know when we are close to a bottom?

43

u/RobertLeRoyParker 1d ago

Liquidity. Gold sells off also when markets are actively tanking. You can bet the central banks and super wealthy aren’t selling their hoards in the underground vaults though.

9

u/ivegotwonderfulnews 1d ago

def liquidity and its been pretty mild so far. Probably also some shorting too

1

u/Background_Pause34 1d ago

Bitcoin is more liquid but is holding on

12

u/WeAreAllFooked 1d ago

Why has gold stalled out? Because a lot of people bought gold when prices were lower and they started selling it when prices jumped up with the tariffs nonsense, Those people will then wait for gold to tumble a little more and buy back in when it's a little lower.

Gold is also something that you normally hold on to if you're planning on a market tanking. Once the gold that people have been holding for a year or more is bought up the price will rebound because demand will outpace the supply of gold.

The whole point of buying precious metals to hedge against a recession is to sit on them for as long as possible.

13

u/zachmoe 1d ago

Gold is as tainted by leverage as everything else.

When people have to raise USD to settle their debts, they have to sell what they have.

USD is a measure of debts, and we have a lot of it.

5

u/Fishherr 1d ago

If you’re really curious, checkout what gold does when a market corrects & goes down in historic times

4

u/NYCmetalguy 1d ago

Nothing makes sense rn, I was also to see gold down, silver is also down—

7

u/exlin 1d ago

I heard somewhere that gold is safe heaven for inflation, it performs badly if you expect deflation (or stagflation I guess).

6

u/SmartCresus 1d ago

Stagflation= inflation combined stagnation in the economy.

If there is inflation, then that should be technically bullish for gold, but who knows in these days.

3

u/stinker_pinky 1d ago

People want to be safe… but not that safe!

3

u/Shmogt 1d ago

I think people are just selling to have cash in general

3

u/BigSteve414 21h ago

Of course it's going down. I just bought my first gold (IAU) a few days ago. Never fails. But I will hold.

1

u/downtherabbbithole 6h ago

Same, except IAUM.

2

u/Spuckler_Cletus 1d ago

Everything has a ceiling, and lots of people would rather buy NOBL or SPY or VOO when it’s having a fire sale.

2

u/earthcomedy 1d ago

bouncing off support area. let's see

2

u/DDRaptors 1d ago

Gold isn’t a hedge. It’s a store of value. 

2

u/9999999910 1d ago

Because JP Morgan started shilling for it.

2

u/Wise_Inspector_3810 1d ago

Everything is correlated. Welcome to globalism.

3

u/sirzoop 1d ago

Market is pricing in a recession and deflation. Oil prices and commodities are collapsing.

3

u/Hot_Hour8453 1d ago

What are you talking about? Gold is 4% up in last month, 15% YTD. Just a week ago it went from 3000 to 3150. A few days retracement is just price action in action before it goes ATH again.

3

u/pnw_sunny 1d ago

irrational market. what people are not talking about was the market was/is way over-valued when measured from a historical view. even today, i think the market is still, on average, about 25% over valued. and gold is not immune to this.

gold has tripled since 2015 and has never been this high.

even gold has limits on upside, outside of a nuke war.

i'm starting to sell some of my GLD holdings, im sitting a shitpile of unrealized gain

people are derisking now to cash, not "hedging" to gold. people that are hedging, like me, are using options to exploit the bear market - i did four puts yesdterday and walked away with easy money.

2

u/docherino 1d ago

Bitcoin is better

1

u/[deleted] 1d ago

[removed] — view removed comment

1

u/AutoModerator 1d ago

Your submission was automatically removed because it contains a keyword not suitable for /r/investing. Common words prevalent on meme subreddits, hate language, or derogatory political nicknames are not appropriate here. I am a bot and sometimes not the smartest so if you feel your comment was removed in error please message the moderators.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

1

u/tmd7284 17h ago

A gold chain I want cost $2500 more overnight since yesterday because of the tariffs

1

u/thatburghfan 1d ago

two days mean nothing.

-1

u/f00dl3 1d ago

If you look at the 70s and 2008, Gold was a top signal. Bitcoin will likely fail hard here soon as well, and while Gold may recover in 20 or 30 years, Bitcoin's main purpose was to not fail in this exact scenario - if it fails, it's mission statement failed.

Gold took from 1980 to 1997 to recover.

2

u/Background_Pause34 1d ago

Huge increase in global m2 though. These assets might hold.

0

u/ThreeTonChonker 10h ago

Because it’s a worthless investment