Gold futures on Monday suffered their biggest one-day decline since the 1980s, as the metal extended its dive into a second straight session and pushed further into bear-market territory.
The broader metals complex also dropped, with silver down 11% for its lowest settlement in more than two years after disappointing Chinese data fed worries over industrial metals demand.
Mining firms were hard hit by the selloff, with shares of Freeport-McMoRan Copper & Gold Inc. FCX -8.30% dropping 8.2% and Newmont Mining Corp. NEM -6.74% down 5.8%, as resource stocks led the S&P 500 index SPX -2.30% lower Monday afternoon.
Gold for June delivery GCM3 -0.19% tumbled $140.30, or 9.3%, to $1,361.10 an ounce on the Comex division of the New York Mercantile Exchange. Prices dropped to as low as $1,355.30.
The closing level was the lowest for a most-active contract since February 2011, according to FactSet data.
Prices saw their biggest one-day percentage drop since February 1983. Gold’s one-day dollar drop was the biggest since January 1980 and the second largest in its history.
Monday’s loss comes on top of Friday’s selloff, when gold lost $63.50, or 4.1%, to $1,501.40 an ounce. Friday’s settlement price marked a 20.5% drop for the most-active contract from the record settlement of $1,888.70 an ounce reached on Aug. 22, 2011.
Silver for May delivery SIK3 -1.97% dropped $2.97, or 11%, to end at $23.36 an ounce. Based on most-active contracts, silver futures closed at their lowest since October of 2010, according to FactSet.
With the gold and silver selloff continuing for a second day, “investors would be wise to hold their positions and wait it out,” said David Morgan, publisher of investment newsletter the Morgan Report, adding that these technical selloffs usually last three or four days.
“Institutional investors will continue to unload their positions until a bottom is achieved,” he said, but the fundamentals for both gold and silver are “still strong” against a backdrop of financial woes in Cyprus, geopolitical tensions surrounding North Korea, “and the silver retail market is showing high premiums with shipping delays.”
As for what investors should do next, analysts urged caution. Julian Phillips, contributor to and founder of GoldForecaster.com said he would not sell at this point, “otherwise you may be selling at the bottom.”
“Wait until the fall has slowed and built a base showing it is turning,” he said. “Panic selling on the back of a bear raid is a traditional sign of the bottom. I personally would make myself ready to buy.”