Miningweb: Profit-taking sends gold miners tumbling amid rising volatility

Key topics:Gold miners fall 3%+ after two-day spot gold slump.ETF outflows hit $669M amid record miner gains.Volatility rises; analysts expect price digestion ahead..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Monique Mulima and Geoffrey Morgan.Gold mining stocks continued to sell off Wednesday as investors take profits amid a two-day slump in spot gold prices.Shares of miners like Newmont Corp., Agnico Eagle Mines Ltd. and Barrick Mining Corp. all sank as much over 3% Wednesday after falling around 9% on Tuesday. If those losses hold, the three miners will have unwinded weeks of advances.“Momentum had just reached unsustainable levels, with the bullion gaining almost $500 per ounce in about three weeks,” Scotiabank analyst Hugo Ste-Marie wrote in a note to clients Wednesday.Ste-Marie sees the large correction in gold miners as quicker than expected and sees a potential period of digestion over the next few months.Miners had been surging all year, with gains more than double those in bullion. That had prompted some investors to pull $669 million last month from the biggest ETF tracking gold miners. The VanEck Gold Miners ETF tumbled 9.4% Tuesday in its worst selloff since March 2020 as spot gold suffered its biggest rout in more than a decade. The fund fell as much as 3.5% Wednesday. .Read more:.Miningweb: Leading hedge fund snaps up gold stocks as rally gains momentum .“The gains in the gold sector, specifically in the large caps, may have run a little bit too far too fast, particularly given gold is up only half of that,” Candice Bangsund, a portfolio manager at Fiera Capital Corp., said..That view was widely shared, though timing a downturn after a strong run is not without its own perils. Wall Street pros talk of “blow off tops” to bull runs, where some of the biggest gains in the rally occur right before a sharp drop. It’s hard to know if Tuesday marked the beginning of a prolonged selloff in gold and metals miners, or just a one-day blip.“I’m just clinging to the side of the rocket right now and hoping to somehow eject before it turns around,” said Jay Kaeppel, senior research analyst at SentimentTrader. “I’ve seen these things before, it never lasts forever,” he said by phone.Investors in the VanEck exchange traded fund pulled $668.6 million in September, the biggest outflow in five months, in a sign that some had grown skeptical of the rally’s staying power. The fund is still up 115% this year. Newmont, the biggest US miner, has soared 131% this year.Nancy Tengler, chief investment officer and chief executive at Laffer Tengler Investments, suggested the moves have some merit. “I’ve been bullish on gold for years, but what I’m seeing now keeps me up at night,” she said. “Gold has become the ‘risk free’ trade. Nobody questions whether it’s lofty.”Bangsund expects gold and miner prices to level off in the next few months, particularly if the Federal Reserve doesn’t deliver the two rate cuts that market participants are betting on.More worrisome is the volatility that’s started to show up in precious metals prices, a market backwater coveted for its stability and haven status. Realized volatility in gold prices against the S&P 500 reached their highest level since 2020 on Tuesday..“That volatility day to day is gonna be extreme here as people take money off the table,” said John Ciampaglia, CEO and managing director of Sprott Asset Management LP.Assuming the volatility and rapid price swings don’t lead to forced selling that begets a bigger rout, Ciampaglia said he sees a strong longer-term case for gold mining stocks. He expects them “to be printing money” this quarter as their costs have fallen while the commodity has hit records.Newmont reports third-quarter results Thursday, while Agnico Eagle results are due next week. Barrick doesn’t report until November..Read more:.Miningweb: Reminder: Gold isn’t a safe haven - Allison Schrager.To be sure, derivatives traders are betting on gold and gold stocks moving higher. Options volumes climbed to a record last week on the SPDR Gold Shares fund, and most of the demand has come from the bulls “with investors using options to chase the rally in gold,” said Mandy Xu, vice-president and head of derivatives market intelligence at Cboe Exchange Inc.Those bets look a little premature now.SentimenTrader’s Kaeppel expects that while gold mining stocks can continue to gain off rising bullion prices, they remain quite speculative so a rally in the US dollar would trigger a sell off.“When they get a sell off, my guess is a month or two months worth of gains will disappear in a couple of days and then the market will decide where to go from there,” Kaeppel said..© 2025 Bloomberg L.P.

Miningweb: Profit-taking sends gold miners tumbling amid rising volatility

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