This follows a disappointing end to the week for the gold price on Friday.
What happened to the gold price?
According to CNBC, traders were selling safe haven assets such as gold and silver on Friday.
This led to the gold futures price sinking a sizeable 4.1% to US$1,835.40 an ounce and the silver price falling by an even greater 9.6% to US$24.64 an ounce.
Things weren’t much better for fellow precious metal, platinum, which shed 4.5% of its value on Friday night.
Why did the gold price sink lower?
Market analysts believe this weakness is attributable to traders giving up on their safe haven trade now that political risks are subsiding in the United States.
Edward Moya, senior market analyst at OANDA, told CNBC: “Gold is having a major fundamental shift for many investors and they’re starting to abandon their safe haven trade. You’re probably going to see that the Treasury market sees some strong flows and that’s taking away some of the appeal from gold.”
Bart Melek, head of commodity strategies at TD Securities, notes that the Democrats taking control of the U.S. Senate has raised bets for large stimulus. This has lifted the benchmark 10-year bond yield to its highest level since March.
Melek said: “We’re going to see a lot more of stimulus and that ultimately moved interest rates higher.”
Some analysts also believe that investors could have diverted funds to Bitcoin, which has been on fire since the start of the year.
But whatever the reason for the weakness, one thing that is for sure, is that Saracen Mineral Holdings Limited (ASX: SAR) and fellow gold miners are likely to start the week deep in the red.
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