Gold miners endured a brutal sell-off Tuesday, with sector-wide losses hitting double digits after bullion plunged more than 5% in a single session, marking the worst trading day for the metal since August 2020 and triggering its sharpest mining stock rout since the COVID-driven crash of March 2020.
The VanEck Gold Miners ETF (NYSE:GDX), which has been the year's top-performing equity industry fund with over 110% gains, dropped 9.8% during New York afternoon trading. Shares of Newmont Corp. (NYSE:NEM), the world's largest gold miner, fell 9.2%.
The collapse in miner stocks followed a synchronized retreat in precious metals as profit-taking and rising risk appetite across global markets met stiff resistance in gold's price near record highs.
Chart: Gold Miners Sink 10% As Bullion Crashes
What Sparked Tuesday’s Gold Sell-Off
“It looks as if gold is finally having a bit of a downside correction following its record-breaking upside run,” said David Morrison, senior market analyst at Trade Nation, in an emailed comment.
Morrison said the gold sell-off is largely technical, triggered by repeated failures to break above $4,400, with resistance holding firm near $4,380.
Support levels to watch include the critical psychological floor at $4,000, where a bullish trend line converges. If these levels fail, further downside could be in store.
For Morrison, the correction may simply be “a much-needed reset” for gold’s momentum indicators such as the MACD (Moving Average Convergence Divergence), which had signaled overbought conditions.
Fawad Razaqzada, market analyst at Forex.com, said the drop was “always going to come one of these days” after the parabolic rally.
He highlighted a combination of a stronger dollar, improving risk sentiment—highlighted by the Nikkei 225 futures surging above 50,000—and hopes of a renewed U.S.-China trade truce, which dampened haven demand.
“Investors have finally started to take profit after the record-breaking run,” said Razaqzada, adding that “long-side liquidation has added some real selling pressure for a change after what was one-way traffic.”
Fundamentals May Still Favor Gold Bulls
Despite the pullback, some analysts and institutional investors continue to believe that gold's long-term drivers remain intact.
Imaru Casanova, portfolio manager for gold and precious metals at VanEck, said the rally isn't over, citing “strong central bank buying and persistent safe-haven demand” as continued tailwinds.
Investor attention now turns to Newmont's third-quarter earnings on Thursday, which kick off the mining sector's reporting season.
Peter Spina, president of goldseek.com, said it's shaping up to be a strong earnings season for miners.
“For Gold miners, the earnings season is going to be a blockbuster,” he said in a tweet.
Otavio "Tavi" Costa, a portfolio manager at Crescat Capital, said gold miners are "effectively printing money" at current prices. He indicated that the Philadelphia Gold and Silver Index's free cash flow has surged 11 times in recent quarters.
"Fundamentals have far outpaced the rally," Costa said, suggesting that despite the recent run-up, miners remain undervalued relative to their earnings power.
Bottom Line: Buy the Dip Or Wait It Out?
Tuesday's crash in gold miners marks a clear inflection point, but analysts remain split.
If $4,000 holds as support and macro conditions align, this could prove a classic buy-the-dip scenario. However, if sentiment sours further or earnings disappoint, more downside could follow.
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Photo: ImageSymphony/Shutterstock
