(Bloomberg) — Gold plunged as concerns about artificial intelligence spurred a selloff across financial markets, with algorithmic traders appearing to amplify the precious metal’s sudden drop. Silver and copper also slid.
US equities tumbled as investors bet that AI would dent some companies’ future earnings, triggering a rout across risk assets. The dramatic decline in gold — which didn’t have a clear catalyst — was likely intensified by selling from commodity trading advisers using computer models to bet on price moves, said Michael Ball, a macro strategist at Bloomberg.
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Bullion fell as much as 4.1% while silver plunged 11%. Copper on the London Metal Exchange declined 2.9%. The metals have since pared some losses.
What Bloomberg Strategists Say…
Thursday’s AI-disruption driven risk-off tone in equities is starting to broaden out, with metals dropping suddenly on what looks like algo selling.
While there’s been a small bounce, metals are overall getting hit hard in a sudden air-pocket kind of move lower that feels more like systematic strategy selling — the kind of momentum-driven de-risking you often see from the CTA community when levels give way.
— Michael Ball, MLIV Macro Strategist
Read the full post here.
Margin calls also likely added to the selloff, with some investors forced to exit positions in commodities including metals to provide liquidity, said Nicky Shiels, head of metals strategy at MKS PAMP SA.
“We are all clueless. It all happened so quickly and feels like a ‘risk-out’ move,” Shiels said. In times of extreme market stress, haven assets like gold will also be sold by investors in dire need of liquidity, she added.
Some of the selloff in gold and silver on Thursday likely also stemmed from profit-taking, as the metals’ most recent blistering rally was driven partly by speculative buying.
“For gold and silver, a great deal of trading remains sentiment and momentum driven. On days like these they will struggle,” said Ole Hansen, a commodity strategist at Saxo Bank.
Gold and silver’s ferocious run since 2024 accelerated last month, with momentum-driven buying helping the metals hitting successive highs. That came to an abrupt halt on Jan. 29, with gold plunging the most in over a decade and silver tumbling the most on record.
