MarketWatch analyses the recent downturn in precious metals today, noting that physical buyers are still buying, but those holding "paper gold" such as ETFs and futures contracts are bailing out to push more money into equities.
When someone cashes out of an ETF backed by physical metal, the administrators sell into the market, no matter what it is doing. As the stock market continues on its run and the Fed forces bond yields down, more people see no need at this time for the insurance precious metals provides. They dump their ETF shares and other paper positions and go "all in" on equities as they chase returns.
From the article:
“There is a clear disconnect between the paper and physical market,” said Jan Skoyles, head of research at The Real Asset Co., a precious-metals investment platform provider.Physical buying remains strong, but “those in the paper market look at this on a day-by-day basis and today gold doesn’t look as attractive as other asset classes.”
Central Banks in the emerging markets are still buying gold, including China and Russia. Their governments and citizens face inflation pressures as the developed nations continue to print money and devalue their currencies. But since most paper positions do not need physical metal, their actions can swamp the physical market.