Wheaton Precious Metals Plummets 1.99%: What's Behind the Sudden Downturn?

Summary
• Wheaton Precious Metals (WPM) trades at $123.01, down 1.99% intraday
• 52-week high of $126.18 now within 2.5% range
• Options chain sees heavy activity in $115–$117 strike puts
• Gold prices retreat over 1% amid profit-taking and dollar strength

Wheaton Precious Metals faces a sharp intraday decline as gold markets unwind months-long rallies. The stock trades near its 52-week high but struggles to hold above key technical levels. With gold futures and sector ETFs like GOAU and GDX also retreating, the move reflects broader macroeconomic pressures. Investors are now scrutinizing whether this correction signals a pause or a deeper shift in precious metals demand.

Gold Price Correction Drives Wheaton Precious Metals Down
The decline in WPM mirrors a broader retreat in gold prices, which fell over 1% as investors locked in profits after a record-breaking rally. Gold’s pullback was exacerbated by a slightly stronger U.S. dollar and cautious sentiment ahead of key employment data. As a streaming company tied to gold production, Wheaton’s valuation is directly sensitive to the metal’s price. The stock’s inability to hold above its 200-day moving average ($96.11) and the 50-day SMA ($113.85) amplifies bearish momentum. Analysts note that macroeconomic uncertainty—particularly around Fed rate policy—has triggered a shift in risk appetite, weighing on non-yielding assets like gold.

Gold Sector Slumps as Precious Metals Miners Follow Commodity Decline
The gold sector underperformed with Newmont (NEM) down 1.14% and VanEck Gold Miners ETF (GDX) retreating 1.42%. Wheaton’s 1.99% drop outpaces peers like Franco-Nevada (FNV, -1.05%) and Agnico Eagle (AEM, +0.33%), highlighting its sensitivity to gold’s volatility. The sector’s underperformance aligns with gold’s technical correction, as miners typically mirror the metal’s price action with added leverage.

Bearish Options and ETFs Emerge as Strategic Plays in Volatile Precious Metals Market
• 200-day average: $96.11 (well below current price)
• RSI: 66.00 (overbought territory)
• MACD: 3.71 (bullish) vs. signal line 3.75 (bearish divergence)
• Bollinger Bands: Price at $123.01 near lower band ($107.65–$127.52)
• Key support/resistance: 30D support at $117.11–$117.64, 200D support at $90.34–$91.44

Technical indicators suggest a critical juncture for WPM. While the 52-week high ($126.18) remains in sight, the RSI’s overbought reading and bearish MACD divergence signal potential for a pullback. The U.S. Global GO Gold ETF (GOAU, -1.59%) and VanEck Gold Miners ETF (GDX, -1.42%) offer leveraged exposure to the sector’s near-term volatility. For options, two contracts stand out:

• WPM20260116P115 (Put, $115 strike, Jan 16 expiration)
- IV: 49.06% (moderate)
- Leverage ratio: 117.29%
- Delta: -0.1849 (moderate sensitivity)
- Theta: -0.0458 (slow time decay)
- Gamma: 0.0267 (high sensitivity to price swings)
- Turnover: $5,190
- Payoff at 5% downside (ST = $116.86): $1.86 per contract
- Why it stands out: High leverage and gamma make this put ideal for capitalizing on a short-term dip, with moderate IV ensuring cost efficiency.

• WPM20260116P117 (Put, $117 strike, Jan 16 expiration)
- IV: 48.30% (moderate)
- Leverage ratio: 83.21%
- Delta: -0.2439 (strong sensitivity)
- Theta: -0.0384 (slow decay)
- Gamma: 0.0318 (very high sensitivity)
- Turnover: $6,068
- Payoff at 5% downside (ST = $116.86): $0.86 per contract
- Why it stands out: Strong delta and gamma position this as a high-conviction bearish play, with liquidity supporting entry/exit.

If $117.64 support breaks, consider WPM20260116P115 for a defined-risk bearish trade.

Backtest Wheaton Precious Stock Performance
The backtest of WPM's performance after a -2% intraday plunge from 2022 to now shows favorable results, with win rates and returns indicating the strategy's resilience and potential for positive gains. Here's a detailed analysis:1. Frequency and Win Rates: The backtest includes 750 events, with a 3-day win rate of 55.47%, a 10-day win rate of 58.93%, and a 30-day win rate of 63.60%. This suggests that WPM tends to recover and even exceed its initial position in the short to medium term following the intraday plunge.2. Returns: The average 3-day return is 0.62%, the 10-day return is 1.66%, and the 30-day return is 4.67%. These returns, while modest, indicate that WPM can generate positive returns in the days following the intraday plunge. The maximum return during the backtest was 9.12%, which occurred on day 59, suggesting that there is potential for significant gains if the strategy is held for a sufficient period.In conclusion, WPM's performance after a -2% intraday plunge from 2022 to now is generally positive, with a higher win rate and returns over the short to medium term. This resilience may be due to factors such as market dynamics, economic conditions, and WPM's own fundamentals. Investors should consider these factors and their own risk tolerance and investment goals before making investment decisions.

Act Now: Position for a Gold Sector Reversal or Deepening Correction
Wheaton Precious Metals’ 1.99% decline reflects broader macroeconomic pressures on gold and the sector. While technical indicators suggest a potential pullback, the stock’s proximity to its 52-week high and strong institutional ownership (70.34%) hint at resilience. Watch Newmont (NEM, -1.14%) for sector cues. Aggressive traders may short WPM20260116P115 if $117.64 support fails, while long-term bulls should hold for a rebound above $127.52. The key takeaway: volatility is here to stay—position accordingly.