Gold drops below US$4,100 as tech-led sell-off spurs liquidation

[SINGAPORE] Gold extended a decline, as a tech-led sell-off on Wall Street prompted investors to cut bullion holdings to cover losses elsewhere in their portfolios.

Spot gold dropped below US$4,100 an ounce, after giving up 1.7 per cent in the previous session for its lowest close in two weeks. Treasuries rallied on Tuesday (Jun 23) and a gauge of the US dollar rose 0.4 per cent, making gold that’s priced in the US currency more expensive for most buyers.

While gold is known as a haven investment, it often falls during big cross-market sell-offs as it functions as a source of liquidity. Stocks in Asia were poised to extend losses on Wednesday on concerns that the AI-driven equity rally has run too far.

The tech slump has heaped further pressure on gold, which is already weighed down by concern that lingering inflation risks mean the Federal Reserve will hike interest rates.

The hawkish tone adopted by new Fed chair Kevin Warsh has jolted investors and offset the positive impact from an interim US-Iran peace deal signed last week. Higher borrowing costs are a headwind for non-yielding precious metals.

Spot gold fell 0.8 per cent to US$4,083.77 an ounce at 7.40 am in Singapore. Silver dropped 1.1 per cent to US$60.86. Platinum and palladium also declined, while the Bloomberg Dollar Spot Index was flat. BLOOMBERG