Gold prices tumbled in their biggest daily drop in over ten years as a stunning rally in precious metals came to a halt.
Futures for the yellow metal (GC=F) dropped as much as 5.5% to hover near $4,141 per troy ounce, on pace for their largest one-day drop in 12 years.
Silver futures (SI=F) also tumbled more than 7% to mark their largest daily drop since 2021.
The move came amid easing trade tensions between Washington and Beijing, a rise in the US dollar, and technical indicators flashing overbought conditions.
“Gold had several attempts to push above $4,400, starting last Thursday. But on each occasion, it ran into resistance,” Trade Nation senior market analyst David Morrison wrote in a note on Tuesday.
The key question now is whether the slide represents the start of a much-needed correction after a stunning rally year to date, he added.
“The first major test to the downside comes in around $4,000,” Morrison said. “But it’s also quite possible that this is all we get from the dip and that buyers come back in around $4,200.”
Investors bought the dip last Friday when gold briefly dropped more than 1.5%, a rare pullback during its recent surge, as precious metals and equities reached all-time highs in October.
“This is just a bump in the road,” Sevens Report Research founder Tom Essaye told Yahoo Finance on Tuesday.
“You still have elevated inflation,” he said. “You have low real interest rates. You’ve got geopolitical concerns, you’ve got US government disfunction. That’s all a bullish cocktail for gold.”
Gold has climbed 28% since mid-August amid central bank purchases and inflows into gold-backed exchange-traded funds (ETFs). Investors piled into the metal to hedge against trade tensions and a flight from fiat currencies.
“What would break the back of gold would be if all of the sudden we greatly reduced our debt — not happening yet — and peace broke out in the world,” Michele Schneider, chief strategist at Marketgauge.com, recently told Yahoo Finance.
Wall Street remains bullish on the precious metal going into next year.
Bank of America analysts recently reiterated their “long gold” recommendation, forecasting a peak of $6,000 per ounce by mid-2026.
Meanwhile, Wall Street has been upping its price targets on gold. Goldman Sachs sees gold hitting $4,900 per troy ounce by the end of next year, up from its prior prediction of $4,300.
JPMorgan analysts said the yellow metal could hit $6,000 per ounce by 2029.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
