A long-anticipated gold crash lures bargain hunters worldwide

LONDON - As pictures of queues outside gold stores flooded social media over the past month, professional precious metals traders were getting increasingly nervous.

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Gold is “an overcrowded trade that’s overextended by every technical metric”, Mr Nicky Shiels, head of research at precious metals refiner MKS Pamp, wrote to clients on Oct 6.

Two weeks later, on Oct 20, as prices soared to new record highs near US$4,400 an ounce, Mr Marc Loeffert, a trader at Heraeus Precious Metals, warned that the metal was “getting even more overbought”.

Gold prices plunged by as much as 6.3 per cent on Oct 21, in the biggest drop since 2013, and held losses through Oct 24 to close at US$4,113.05 an ounce. In US dollar terms, its US$138.77 weekly drop was among the largest ever.

On Oct 27, gold extended its drop as progress on a US-China trade deal sapped safe haven demand. Spot gold fell 1.1 per cent to US$4,070.31 per ounce as at 11.02am in Singapore.

Has gold hit a turning point in a multiyear bull run, or just a dip? In Bangkok’s Chinatown, the nation’s gold trading hub, Ms Sunisa Kodkasorn, a 57-year-old textile factory worker, had no doubt about the answer.

“Gold is the best investment,” she said. “We decided to gather all our money and come today because we knew prices had dropped.”

She is not alone. From Singapore to the United States, dealers say they have seen a rush of interest from people looking to buy gold as prices plunged last week. Ms Kodkasorn’s attempt to buy the dip was stymied because the size of gold bar she could afford was sold out.