First, look at both charts below of the S&P and the CCI. Notice that both are now solidly in the red for this year. What this tells us is that the vast majority of hedge funds have lost money for the year unless they have been very nimble and were able to beat the rest of their world to the sell button.
Also consider that many of their positions are heavily leveraged. Margin calls are now coming in. What do they do? They can obviously sell out of their positions and take the losses or they can try to pony up additional cash and hold the positions a bit longer in the hope that the markets will rally up and let them sell out at a better level or even initiate some new longs.
That helps to explain why gold was hit so hard this week and why many are now questioning its safe haven status as a result.
First, examine the long term charts of the S&P 500 and the CCI. Notice that both charts are underwater for the year.
Yes, a 30% decline in the gold price then was not fun living through as gold was sold off fiercely as carry trades were unwound and a mad scramble for cash commenced for the same reasons I just listed above. However, looking back in hindsight and at the price chart, that steep move lower amounted to a tempest in a tea pot on the longer term chart. Gold went on to more than double in price from that reaction low.