The gold market is headed for another correction.
On Wednesday, the Dow Jones Industrial Average fell 6%, while the S&P 500 and Nasdaq fell 1.7%.
It’s the second straight day of declines for the gold market, and the first since the US dollar strengthened against the greenback in early March.
The sell-off has already forced the US government to slash its growth forecast for the year, and put a damper on gold’s hopes for an early recovery.
Gold bulls have warned of a bubble, and gold has lost $6 billion in value this year.
On Thursday, Gold Futures Trading Commission Chairman John Chiang said investors should be cautious and stay away from the precious metal.
“Investors should consider whether gold can be a safe haven, but they should be aware of the risks that come with it,” he said.
“As gold has become more scarce, investors are more exposed to risk.”
The Gold Bullion ETF (GBP) and Gold Bond ETF (GBA) have been the gold ETFs of choice since early February, when the ETFs launched to drive the price of gold up.
The two ETFs traded at a discount to gold since then, with the GBP trading at more than 2.5 times its face value on Thursday, up from less than 1.6 times in late February.
“The GBP and GBA are not perfect, but in the end, we believe they are the best option for investors and gold investors,” Chiang told CNBC on Thursday.
Chiang has called on investors to stop investing in the gold bullion ETFs.
“We are going to have to re-evaluate all of our portfolios, because the prices are going up, and it’s really a scary situation,” he told CNBC.
The Dow Jones is up 1.2% in morning trading, while the Standard & Poor’s 500 index is up 0.2%.