Gold hit a record $4,381.21 per ounce on Monday before tumbling sharply Tuesday as investors took profits and the US dollar gained strength.
Gold prices saw their biggest one-day drop in five years on Tuesday, retreating from record highs as the dollar firmed and traders locked in profits. The metal had surged recently on expectations of upcoming US interest rate cuts and continued demand for safe-haven assets.
As of 10:51 a.m. EDT (1451 GMT), spot gold was down 5.5%, trading at $4,115.83 per ounce, marking its steepest decline since August 2020. US gold futures for December delivery also slipped 5.3% to $4,129.20 per ounce.
Just a day earlier, gold had touched an all-time peak of $4,381.21, up nearly 60% this year thanks to strong central bank buying, economic uncertainty, and geopolitical tensions.
“Gold dips were being bought as recently as yesterday, but the sharp jump in volatility at the highs over the past week is flashing caution and may encourage at least short-term profit-taking,” said Tai Wong, an independent metals trader.
Dollar Strength and Risk Sentiment Hit Precious Metals
The US dollar index (DXY) rose 0.4%, making gold more expensive for investors holding other currencies. The move came as Wall Street looked set for a stable open, with futures trimming earlier losses amid a batch of upbeat corporate earnings reports.
“Better risk appetite in the general marketplace early this week is bearish for the safe-haven metals,” noted Jim Wyckoff, senior analyst at Kitco Metals, in a market note.
Silver, Platinum, and Palladium Also Slide
Silver was hit even harder, plunging 8.4% to $48.06 per ounce, with traders pointing to a loss of momentum following its recent rally.
“Silver is stumbling badly today and has dragged the entire complex lower,” Wong added. “It appears we have a short-term top at $54, and while sentiment wobbles under $50, silver is likely to trade sideways with substantial volatility as long as gold remains relatively firm.”
Other precious metals followed suit, with platinum dropping 7% to $1,523.30 and palladium falling 6.6% to $1,398.
Market Focus Shifts to US Inflation Data
Traders are now turning their attention to the upcoming US Consumer Price Index (CPI) report for September, which was delayed due to the ongoing government shutdown. The report is expected to show a 3.1% year-on-year increase.
Markets widely expect the Federal Reserve to deliver a 25-basis-point rate cut at its policy meeting next week — a move that could provide renewed support for gold, which tends to perform well in a low-interest-rate environment.
Trump–Xi Meeting in Focus
Investors are also watching geopolitical developments, including a planned meeting between US President Donald Trump and Chinese President Xi Jinping next week in South Korea. The discussion is expected to touch on trade, economic ties, and regional stability – all factors that could influence global risk sentiment and, in turn, gold demand.
Why It Matters
Gold’s sharp pullback underscores just how sensitive precious metals remain to shifts in the dollar and investor sentiment. While long-term fundamentals like central bank demand and easing monetary policy continue to support prices, short-term volatility is likely to persist as traders position ahead of key inflation data and Fed decisions.
