LONDON, Jan 30 - Gold, silver and copper prices tumbled on Friday after hitting record highs this week, as jittery investors moved to lock in profits with hopes for aggressive U.S. interest rate cuts starting to fade and the dollar steadying.
Gold, silver, copper stocks and ETFs dropped in morning trading. ProShares Ultra Gold fell 11%; Anglogold Ashanti fell 9%; Coeur Mining fell 8%; Kinross fell 7%; Gold Fields, Eldorado, Barrick Mining, Harmony Gold, Agnico Eagle Mines, Gold Trust Ishares, SPDR Gold ETF, and Hecla Mining fell 6%; Newmont fell 5%; US Gold Corp. fell 4%.
ProShares Ultra Silver fell 27%; iShares Silver Trust fell 14%; First Majestic Silver, Endeavour Silver, and Hycroft Mining fell 8%; Pan American Silver and Fortuna Silver Mines fell 7%.
Global X Copper Miners ETF fell 7%; Ero Copper, Freeport-McMoRan, and iShares Copper and Metals Mining ETF fell 6%; United States Copper Index Fund fell 4%; Southern Copper fell 3%; BHP Billiton and Rio Tinto fell 2%.
President Donald Trump on Friday said he had chosen former Federal Reserve Governor Kevin Warsh to head the U.S. Federal Reserve. The dollar index, a measure of the U.S. currency against peers had firmed on expectation of Warsh's appointment.
"The market thinks Kevin Warsh is rational and that he won't push aggressively for rate cuts," said Panmure Liberum analyst Tom Price. "Generalist investors who have different agendas - like protecting capital - are taking profits."
A higher U.S. currency makes dollar-priced metals more expensive for holders of other currencies, which could hit demand. This relationship is used by funds which trade using buy and sell signals from numerical models.
INVESTORS CASH OUT AFTER GOLD, SILVER RALLY
With gold and silver prices up 17% and 39% respectively so far in January, profit-taking on the last trading session of the month came after several days of thin liquidity where small flows driven by the fear of missing out triggered outsized moves.
"Both gold and silver were ripe for a correction given the highly speculative and unhinged nature of the latest surge," said Ole Hansen, head of commodity strategy at Saxo Bank.
Gold was down 4.7% at $5,143.40 an ounce at 1201 GMT and silver had lost 11% to $103.40 after hitting records at $5,594.80 and $121.60 an ounce respectively on Thursday.
"Precious metals have discovered gravity," said independent analyst Ross Norman. "It's brutal, but speculators have been reminded these are two-way markets."
Copper, which touched an all-time high at $14,527.50 a metric ton on Thursday, was down 1.1% at $13,465. It has gained around 6% so far this month after climbing 11% in December.
"Prices are likely to remain high and volatile as funds continue to flow into this relatively small, and now very crowded market," said Macquarie analyst Alice Fox.
Traders expect further losses for copper, aluminium and other industrial metals listed on exchanges ahead of the Lunar New Year holiday on February 16, when top metals consumer China will shut down for a week.
"Chinese punters will not want to have any positions in these volatile markets," said Panmure's Price. "Look at what has happened in just 12 hours."