— This is the script of CNBC's news report for China's CCTV on August 12, 2020, Wednesday.
Precious metals, which have been rallying for some time, saw a big drop in Tuesday's trading. Gold futures for December delivery settled down $93.40, or 4.58%, at $1946.3 an ounce on the New York Mercantile Exchange.
It was gold's biggest one-day drop in the dollar since April 15, 2013, and its biggest percentage drop since March 13, according to Dow Jones. In addition, silver for September delivery closed down 11 per cent. Other precious metals, such as palladium and platinum, also fell sharply.
The fall in precious metals is even more marked in the intraday session. Gold suffered its biggest one-day fall in seven years, according to Reuters. There are many reasons for the decline in metals asset prices. On the one hand, the economic data released by the United States on the same day exceeded market expectations.
On the other hand, there have been positive developments in vaccine development in Russia and other major countries. This makes the market risk appetite return, the demand for safe haven weakened. A rebound in the dollar index on the improved economic outlook also weighed on dollar-denominated commodities. Meanwhile, the U.S. Treasury sold $48 billion of three-year bonds on Tuesday and will sell $38 billion of 10-year bonds on Wednesday, those are record for both. The yield on the 10-year U.S. Treasury note rose further in Tuesday trading, this makes gold and silver less attractive. And after a sustained rally that has continued to break records, some investors are taking profits and reducing their holdings can also lead to a pullback in precious metals prices.
However, several analysts told us that they did not see a material change in the overall environment, preferring to remain bullish on precious metals, especially silver, and seeing a short-term drop as a buying opportunity.
Brian Stutland
Equity Armor Investments, Portfolio Manager
it's still in this channel I mean when things get really volatile near tops like this after a big run it gets scary and believe me it could be a sign that we're starting to sell off but we're at the lower end of the channel I think I would still be a buyer right here.
Jim iuorio
managing director of TJM Institutional Services
Well fundamentally the story hasn't changed much at all. If you have to look for one fundamental thing that's maybe changed a little is that up until a few days ago the dollar had been somewhat cascading lower, and it seems to have stabilized
Even so, Tuesday's pullback is a reminder of the risks in precious metals trading, we will keep an eye on the follow up performance.