Gold price crash costs mining shares $10 billion

Gold posted its biggest one-day fall since 2013 today, partially reversing one of the greatest bull runs in the precious metal’s history.

The 6 per cent fall Wednesday took gold to $US4122 ($6348.86) an ounce - after rising 57 per cent this year - a switch that one market veteran blamed on a buying bonanza that saw long lines form outside bullion stores.

“There’s a classic market adage that goes something like ‘when financial news moves from the business pages to the front page, the top is near’,” National Australia Bank foreign exchange strategist Ray Attrill said. “A dash for the profits window was inevitable at some point soon.”

Individual investors and exchange-traded funds invested $26 billion in gold last month, Mr Attrill said, joining a global rush for an asset that normally performs well during periods of economic turmoil.

The retreat triggered a bloodbath on the Australian Securities Exchange, where gold miners lost close to $10 billion in value.

Gold miners tumble

Shares in the two biggest gold miners listed in Australia — Northern Star Resources and Evolution Mining — lost more than 10 per cent in early trade before paring their losses in the afternoon.

Mid-tier producers Genesis Minerals and Ramelius Resources shed more than 11 per cent each.

However, the gold miners’ gains have still heavily outpaced the precious metal’s own price rise in 2025. The VanEck Gold Miners Exchange Traded Fund, which tracks the prices of a basket of listed gold miners, has still more than doubled in value this calendar year and closed at $112.20 on Wednesday.

Long daily queues have formed to buy the metal from the ABC Bullion store in Sydney’s central business district. Other investors bought exchange traded funds (ETFs) that track the gold price in record volumes.

Tony Sycamore, a veteran trader and technical market analyst at investment platform IG Markets, warned the queues were a classic sign of a FOMO (fear of missing out) rally where compulsive behaviour leads people to buy assets purely as they see others getting richer on rising prices.

“It’s the third asset flash crash or position cleanse we’ve had in three weeks,” said Mr Sycamore. “We had bitcoin on October 10 and we had the regional US banks last week. When you look at the common reasons it’s a position unwind unfolding after a big run higher, so it’s a mix of FOMO and overextended price action whether it’s gold, silver, or crypto.”

My Sycamore said he walked past the Martin Place bullion store in the heart of Sydney’s financial district on Wednesday morning and was surprised to still see long queues of people wanting to buy physical gold.

“So it looks like there’s (price) dip buying,” he said. “I’ve seen the GFC unwind, the dotcom crash, the COVID crash, and I’ve never seen anything like these queues. We don’t have hyperinflation here or a big geopolitical threat on our doorstep so I wonder why are they buying? I think it’s just people buying as they see others doing it and that creates the conditions for a snapback like we’ve seen.”

My Sycamore said the medium-term macro economic drivers of lower interest rates should provide support for gold prices over the next 12 months, although he warned he would not be surprised if Wednesday’s pull back extends to push gold prices back under $US4000.

“During COVID in August 2020, gold fell about 5.5 per cent in a day and then preceded to fall about 20 per cent over the next six months, if we got a 20 per cent pullback now it only takes us back to $US3500 and that’s just where we were two months ago,” he said.

Despite the dramatic pullback, gold’s gains in 2025 have still outpaced digital rival bitcoin up 17 per cent and the best-performing major stock indices this year have been Hong Kong’s Hang Seng Index, up 30 per cent and Japan’s Nikkei in adding 19 per cent. Elsewhere, year-to-date, Australia’s S&P/ASX 200 is up 10.9 per cent and US flagship the Nasdaq Index is up 18 per cent.

“We assume such (speculative) positioning had built to substantial levels and ultimately triggered the selloff,” said ANZ Bank on Wednesday morning. “Despite this pullback, we still see long-term drivers in place and providing support to prices.”

Gold still glitters

Gold is also on track to deliver its best year of gains since 1979. This week broker RBC Capital attributed the sharp upswing to growing geopolitical uncertainty as the US and nations allied to the BRIC nations of Brazil, India, Russia, and China split.

“Uncertainty underpins not just the sentiment we have encountered, but most of the gains year-to-date in our view,” said RBC.

“Political uncertainty, amid a US government shutdown, trade and tariff uncertainty with renewed US-China tensions, and general fears around economic growth, inflation, challenging fiscal outlooks, debasement, Fed independence, have all played a role, rising and falling in importance respectively.”

RBC said it expects benchmark spot gold prices to average $US4432 an ounce during the first quarter of 2026, which is around 8 per cent above Wednesday’s price.

Silver prices also retreated nearly 6 per cent on Wednesday morning to fetch $US48.10 a ounce. The metal commonly used in industrial applications and electronics touched a record high of $US54 an ounce earlier this week.

The broader materials index on the S&P/ASX 200 Index fell 3.1 per cent as heavyweight iron ore miners BHP and Rio lost 1.5 per cent and 1.7 per cent, respectively. On the other side of the ledger the best-performing sector was energy. It finished up 1.6 per cent as oil prices rose from five-month lows on positive economic data from China and little sign of a resolution to the war in Ukraine.