Gold price plunges 6% after record high, biggest one-day sell-off since 2013

After weeks of steady gains, Gold's record-breaking rally has finally cooled off. Prices tumbled sharply on Tuesday, October 21, marking the biggest single-day sell-off in over a decade.

The gold price today rose modestly in early trade, recovering less than half a percent after the dramatic slide. At 1:46 a.m. ET Wednesday, spot gold was trading at $4,141.48 per troy ounce, up just 0.4%, per CNN.

Tuesday was another story. The metal dropped as much as 6.3% to $4,082.03 an ounce, just a day after touching an all-time high of $4,381.21. U.S. gold futures closed down 5.7% at $4,087.70 - the steepest fall since June 2013. Silver and platinum prices also followed the trend, sliding 6.7% and 7.2% respectively, according to Forbes. At 9:02 a.m. EDT, the gold rate today stood at $4,052.29 per ounce.

Analysts say the gold sell-off came after a historic rally that had pushed prices to overheated levels. In just two months, gold spot prices surged about 25%, lifted by fears around U.S. debt, inflation, and the possibility of further rate cuts from the Federal Reserve.

After such a strong run, it's no surprise investors wanted to take profits. During an interview with Kitco News, MarketGauge's Chief Marketing Strategist, Michele Schneider, stated that everyone is talking about gold now. “I have to wonder if investors are piling in at the highs.”

Optimism on the easing U.S.-China trade tensions also played a role. The gold rate today eased as investors awaited another round of talks between Washington and Beijing later this week. Both sides are preparing for a meeting between President Donald Trump and Chinese leader Xi Jinping next week.

“I expect we'll probably work out a very fair deal with President Xi of China,” Trump said on Monday. “I think we're going to work out something that's good.”

Also read: Gold price rallies to a record as US-China tariff war concerns boost safe-haven demand

Market watchers, CNN reported, also noted that demand from India, the second-largest gold consumer in the world, usually dips after the Diwali festival, as physical buying is reduced. A stronger U.S. dollar also added more pressure, making gold costlier for overseas buyers. Despite the drop, gold remains up over 50% for the year, outperforming major asset classes.

Because investors took profits after a record rally, trade optimism boosted the dollar.

As of 9:02 a.m. EDT, gold was trading at $4,052.29 per ounce.

The last comparable decline happened in April 2013.

Global trade talks, interest rate expectations, and currency fluctuations.

Source: Hindustan Times
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