Sharp Decline in Gold Prices as Investors Shift to Profit-Taking
Precious metal markets experienced a strong sell-off on Tuesday, leading to a sharp decline in gold prices by 5%, marking the worst daily performance for the precious metal since April 2013. This decline came as a natural reaction to investors seeking to take profits after gold reached a new record level in the previous session at $4381.21 per ounce.
Gold prices in the spot market fell to $4134.19 per ounce, after losses peaked at 6.3% during the session. U.S. gold futures for December delivery also dropped by 4.84% to settle at $4148.30 per ounce.
Tim Waterer, Senior Market Analyst at "KCM Trade" commented on these developments, stating to "Reuters": "Profit-taking and a decline in safe-haven inflows have limited gold price increases today... Any price declines will be seen as buying opportunities as long as the Fed continues its current approach to lowering interest rates."
This move comes at a time when market expectations are strongly leaning towards a reduction in U.S. interest rates, with the "CME FedWatch" tool indicating that markets are pricing in a full quarter-point cut this month, followed by another expected cut in December.
Waterer added while discussing future prospects: "The current rise in gold prices still has room for further increases, unless U.S. Consumer Price Index data, scheduled to be released later this week, shows unexpected upward surprises."
Markets are eagerly awaiting the U.S. Consumer Price Index data that was delayed due to the government shutdown and is set to be announced on Friday, with analysts expecting the index to rise by 3.1% year-on-year in December.
This comes amid the ongoing government shutdown in the United States, now in its twentieth day, which has delayed the release of key economic data and created an information vacuum for investors ahead of the Fed meeting next week. On another front, the economic landscape is witnessing intense diplomatic movements as U.S. Treasury Secretary Scott Piesen is scheduled to meet with Chinese Vice Premier He Lifeng in Malaysia this week in an attempt to ease trade tensions between the two countries.
The wave of decline extended to most other precious metals, with silver dropping to $51.83 per ounce, platinum falling to $1,627.53, while palladium held steady with slight gains at $1,497.62 per ounce.
