Gold and silver prices fell sharply on Friday, continuing the retreat from recent records that started the previous day with a screeching U-turn as traders took profits following a furious rally in metals markets.
The London Metal Exchange (LME) was forced to delay the start of trading, citiung technical issues, affecting global metal markets.
Gold was down 7.4% to below $5,000 per ounce, having earlier in the week climbed as high as $5,600.
Silver dropped almost 17% to below $97/oz, after touching a peak of $120 yesterday.
Copper also gave back ground, down 4.5% to below $6 per pound, having spiked as high as $6.57 earlier in the week. LME 3-month copper futures, having risen 10% to above $14,400 a ton, fell back to $13,618/ton.
Despite the daily fall, gold remained up 15% over the past week and 78% year-on-year, while silver is still up 36% this week and 210% over the past year. Copper was still up 4.5% for the month and 40% over the past year.
The rapid gains and then falls led to retreats for many mining companies, with the FTSE 350 fallers led by declines for Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF, FRA:6E2), Blackrock World Mining Trust (LSE:BRWM), Antofagasta PLC (LSE:ANTO), Pan African Resources PLC (LSE:PAF, OTCQX:PAFRY, JSE:PAN), Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF, FRA:H3M), Fresnillo PLC (LSE:FRES) and Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF).
But most precious metals miners were still well ahead of where they were a month or a year ago, for example, with Endeavour, Fresnillo and Hochschild respectively up 7%, 7% and 23% for the month and well over 150, 400% and 270% from a year ago.
Strategist Jim Reid at Deutsche Bank said markets were showing heightened volatility yesterday, with the S&P 500 slumping 1.5% at one point before almost fully reversing the move, driven by a huge decline for Microsoft.
Gold ended a run of eight consecutive daily gains, at one point falling 5.7% on the day in what Reid said "seemed like a sudden deleveraging".
"Given that the total value of Gold in the world is around $37 trillion, that was a $2.1 trillion brief slump."
He said the mood "wasn’t helped by the geopolitical backdrop", as speculation about a potential US strike on Iran helped push Brent crude oil above $70 a barrel for the first time since last July.
Ipek Ozkardeskaya at Swissquote Bank said geopolitics had otherwise been "calm-ish", with the rally in copper "triggered by intense speculative trading in China".
Gold's rise and fall is "insane", she said, wiped out around $2.5 trillion in market value in just 30 minutes at one point.
The price action followed a spike in the gold volatility index, as the rally had "lately became driven more by speculation than fundamentals".
She said there could be a pullback of 8-10%, toward the $4,600-4,800 per ounce range, which would "relieve some of that stress".
"Price pullbacks, however, will likely be seen as opportunities to strengthen long positions, as the major drivers of the metals rally – unsustainable-but-still-rising G7 debt, waning appetite for the US dollar, trade and geopolitical uncertainties, the search for supranational assets able to preserve value in case of further geopolitical chaos, and potentially rising price pressures – remain fully in play."
** UPDATE: prices updated **