Gold prices sank Tuesday in their steepest one-day drop in years, sliding almost 5% as a surging US dollar and heavy profit-taking halted the precious metal’s record-setting run above $4,300 an ounce.
As of noon Tuesday, gold futures were trading at $4,143.90 per troy ounce, down $215.50, or 4.94%.
The decline followed Monday’s close at $4,359.40, when the metal hit a fresh all-time high.
The selloff marks gold’s sharpest single-session decline since April 2013 and its first meaningful correction after a monthslong rally fueled by safe-haven buying and expectations of Federal Reserve rate cuts.
Prices opened at $4,371, climbed briefly to a high of $4,393.60 — and then slid steadily through morning trading to a low of $4,090 before stabilizing.
“I think it’s as simple as it’s a risk-off day after a meteoric rise,” said Stephanie Link, chief investment strategist and Portfolio Manager at Hightower Advisors.
“It’s not just gold, but silver and other precious metals are down. In the past 10 weeks, gold and silver inflows have been $34.2 billion. It’s the most ever in history.”
Link called the development “pretty frothy.”
The US Dollar Index strengthened nearly 0.7% Tuesday morning, its biggest rise this month.
A firmer dollar makes gold more expensive for foreign buyers, often triggering sharp reversals after big rallies.
The latest downturn comes just one day after gold briefly topped $4,380, capping a more than 50% year-to-date gain driven by geopolitical risk, global inflation and growing belief that the Fed is preparing to ease monetary policy by year’s end.
According to the World Gold Council, China, India and Turkey have continued steady gold purchases through October, reinforcing demand even as futures prices retreat.
The sharp move also rippled through mining stocks. Newmont Corp. and the VanEck Gold Miners ETF were both down more than 9% on Tuesday.
Investors piled into gold through the third quarter amid persistent inflation and volatile equity markets.
The metal’s appeal as a hedge strengthened further in October as political tensions escalated in the Middle East and Europe, prompting a rush to perceived safe assets.
Futures markets continue to anticipate a 60% probability of a Fed rate cut in December, according to CME Group data — a key driver of bullion’s earlier surge.
Lower interest rates typically weaken the dollar and bolster gold by reducing the opportunity cost of holding non-yielding assets.
But traders cautioned that volatility could persist if upcoming inflation or employment data surprises to the upside, tempering the Fed’s dovish pivot.
Asian demand is expected to remain strong through year-end, particularly in India ahead of Diwali and in China, where retail buying has surged as investors seek shelter from a weakening yuan.
