GOLD suffered its steepest decline in 12 years on Tuesday, retreating sharply after an extended rally pushed bullion to consecutive all-time highs.
Gold plummeted as much as 6.3% following Monday’s record peak of $4,381.52 per ounce, Bloomberg News reported. Multiple headwinds converged to trigger the selloff, including improving relations between Washington and Beijing, dollar strength, stretched technical indicators, and murky market positioning data, said the newswire
Appetite for safe-haven assets has diminished as President Donald Trump prepares to meet Chinese leader Xi Jinping next week for trade negotiations. Meanwhile, the greenback’s appreciation has made gold costlier for international buyers, and technical charts signal prices had ventured deep into overbought levels.
“Traders have been increasingly nervous about a potential pullback,” noted Ole Hansen, commodities strategist at Saxo Bank. “Corrections reveal a market’s genuine strength, and any decline will likely find support from underlying demand.”
The continuing federal government shutdown has eliminated a crucial information source for market participants—the Commodity Futures Trading Commission’s weekly positioning report. This data vacuum leaves speculators guessing about hedge fund exposure to gold and silver futures, potentially amplifying erratic trading behaviour.
“Missing positioning information arrives at an awkward moment, with suspected heavy speculative long positions leaving both metals exposed to sharper corrections,” Hansen added.
India’s seasonal purchasing period has also concluded, removing another source of demand. Market turbulence has intensified recently, with options activity on the world’s largest gold-backed exchange-traded fund exceeding two million contracts on consecutive days last week, establishing new records as traders scrambled to protect portfolios or capitalize on price swings.
