It could be a challenging day of trade for many of Australia’s leading gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) on Wednesday.

This follows a shocking night of trade for the spot gold price, which crashed materially lower following a return of risk appetite.

What happened to the gold price?

According to CNBC, the spot gold price has crashed 5.8% lower during overnight trade to US$1,921.8 an ounce. This is over US$150 lower than Friday’s record high of US$2,072.5 an ounce.

The silver price hasn’t fared well, either. The fellow safe haven asset is down a massive 15% to US$24.86 an ounce at the time of writing. This could be bad news for South32 Ltd (ASX: S32). Its shares have been rising on the back of the improving silver price in recent weeks.

Analysts believe the improving risk appetite is due to better than expected economic data and news of a potential Russian coronavirus vaccine.

Edward Moya, senior market analyst at broker OANDA, told CNBC: “This feels like a mini crash. We could not overcome the early morning headlines of a Russian potential vaccine, and there was just continued optimism flowing into stocks.”

This sentiment was echoed by Bart Melek at TD Securities. He told clients: “The precious metals complex was driven by a drop in rates, a steady increase in inflation expectations and a falling U.S. dollar. The rally is now giving up some of these gains as these drivers lose momentum.”

Mr Melek also notes that the trade became crowded, which is why the pullback has been particularly severe.

“Speculators and Commodity Trading Advisors (CTAs) are reducing their gold and silver exposure, as volatility trends higher and as they take profits out of a crowded trade,” he explained.

Given how strongly the shares of Evolution Mining Ltd (ASX: EVN), Saracen Mineral Holdings Limited (ASX: SAR), and other gold miners have rallied in recent months, it unfortunately looks set to be a very red day for their shares on Wednesday.

More reading

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• 5 things to watch on the ASX 200 on Tuesday
• Gold price tops US$2,000: What’s driving it higher and how can you benefit?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Tuesday the S&P/ASX 200 Index (ASX: XJO) continued its positive run and pushed higher again. The benchmark index rose a solid 0.5% to 6,138.7 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to edge higher.

It could be another positive day for the ASX 200 on Wednesday, despite a poor night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is set rise 5 points or 0.1% at the open. On Wall Street, the major indices gave back their gains to end the day deep in the red. The Dow Jones fell 0.4%, the S&P 500 dropped 0.8%, and the Nasdaq index fell 1.7%.

CBA FY 2020 results.

The Commonwealth Bank of Australia (ASX: CBA) share price will be in focus today when it releases its full year results for FY 2020. According to a note out of Goldman Sachs, its analysts expect the bank’s FY 2020 cash earnings from continued operations (pre-one offs) to come in at $7,815 million. This represents an 8% decline on the prior corresponding period. The broker is forecasting a final dividend of 100 cents per share.

Afterpay block trade.

The Afterpay Ltd (ASX: APT) share price will be on watch today after one of the biggest black trades of the year occurred after market on Tuesday. According to the AFR, an institutional investor was very keen to get a slice of Afterpay, grabbing 2.85 million shares for $71.50 each. This was a 1.9% premium to the closing price and a total consideration of $203 million. Given that the trade was undertaken by Goldman Sachs, it could be a sign that Tencent Holdings has been increasing its stake. Goldman bought a 5% stake for the WeChat owner earlier this year.

Oil prices drop.

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could drop lower today after oil prices came under pressure overnight. According to Bloomberg, the WTI crude oil price is down 0.65% to US$41.67 a barrel and the Brent crude oil price has fallen 0.8% to US$44.63 a barrel. Oil prices were charging higher before giving back their gains and more during a volatile session.

Gold price crashes.

It could be a difficult day of trade for gold miners including Newcrest Mining Limited (ASX: NCM) and Saracen Mineral Holdings Limited (ASX: SAR) after the gold price crashed lower. According to CNBC, the spot gold price has crashed 5.5% to US$1,924.2 an ounce after a return of risk appetite following encouraging economic numbers and a supposed Russian coronavirus vaccine.

More reading

• ASX gold miners on watch after gold price crashes lower
• The latest ASX stocks leading brokers are urging you to buy today
• ASX 200 rises 0.5%, Mesoblast plunges
• Have $2,000 to invest? Try these 2 ASX growth shares today
• Why the Coles share price just hit a new record high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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