Gold Suffers Biggest Drop in 12 Years After Hitting Record High
Traders noted that while buying continued on dips earlier in the week, a sharp rise in volatility near recent highs has triggered caution.
Quick overview
- Gold prices fell over 6.3% on Tuesday, marking the largest one-day decline in 12 years after reaching an all-time high of $4,381.52 per ounce.
- The drop was influenced by renewed optimism in U.S.-China trade talks, a stronger dollar, and uncertainty from the ongoing U.S. government shutdown.
- Despite a significant year-to-date increase of approximately 60%, traders are exercising caution due to rising volatility and shifting market sentiment.
- Other precious metals also experienced declines, with silver dropping 6.8% and platinum and palladium falling 5.4% and 5.1%, respectively.
Gold tumbled more than 6.3% on Tuesday, marking its sharpest one-day decline in 12 years, after a multiweek rally that had pushed the metal to an all-time high of $4,381.52 per ounce on Monday.
By Tuesday’s close, prices had fallen to around $4,160, pressured by renewed optimism over U.S.-China trade talks, a stronger dollar, and investor uncertainty surrounding the ongoing U.S. government shutdown.
The metal’s recent surge had been fueled by expectations of further Federal Reserve rate cuts and robust safe-haven demand, according to Reuters. So far this year, those factors—along with persistent geopolitical tensions—have lifted gold prices by roughly 60%.
Traders noted that while buying continued on dips earlier in the week, a sharp rise in volatility near recent highs has triggered caution, encouraging some short-term profit-taking. “Improved risk appetite in broader markets at the start of the week has been bearish for traditional safe-haven assets,” analysts said.
Gold, which yields no interest, typically benefits in low-rate environments. However, as market sentiment improves, capital often shifts toward risk assets.
Precious Metals Market – Silver Drops
Other precious metals also faced heavy selling:
Silver plunged 6.8% to $48.89 per ounce, after briefly testing a short-term top near $54 last week. Analysts expect sideways trading with high volatility while gold stabilizes.
Platinum fell 5.4% to $1,550.10, and palladium slid 5.1% to $1,425.19.
Markets now turn their attention to the delayed release of the September U.S. CPI report, scheduled for Friday due to the government shutdown. The data is expected to show 3.1% annual inflation, reinforcing market bets that the Federal Reserve will cut interest rates by 25 basis points at its policy meeting next week.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save