Gold Prices Plunge 5% as Investors Cash In on Profits
On Tuesday, precious metal markets faced a substantial sell-off, leading to a dramatic 5% drop in gold prices, the largest single-day decline since April 2013. This decline was a natural response as investors sought to lock in profits after gold reached a record high of $4,381.21 per ounce in the previous session.
Spot gold prices fell to $4,134.19 per ounce, with losses peaking at 6.3% during the trading session. Meanwhile, December gold futures also dropped by 4.84%, settling at $4,148.30 per ounce.
Tim Waterer, senior market analyst at KCM Trade, commented to Reuters, "Profit-taking and reduced inflows into safe havens have curtailed gold price increases today... Any price drop will be seen as a buying opportunity as long as the Fed maintains its current interest rate policy."
This movement comes amid strong market expectations for a reduction in U.S. interest rates, with the CME FedWatch tool indicating that markets anticipate a complete 25 basis point cut this month, followed by another expected reduction in December.
Waterer further noted regarding future prospects: "The current rise in gold prices still has room to grow unless the upcoming U.S. Consumer Price Index data, set to be released later this week, reveals unexpected bullish surprises."
Markets are eagerly awaiting the U.S. Consumer Price Index data, which has been delayed due to the government shutdown and is scheduled for release on Friday, with analysts predicting a year-over-year increase of 3.1% in December.
This situation unfolds as the U.S. government shutdown enters its twentieth day, delaying the release of key economic data and creating an information void for investors ahead of next week's Fed meeting. Meanwhile, U.S. Treasury Secretary Scott Piesen is set to meet with Chinese Vice Premier He Lifeng in Malaysia this week in an effort to ease trade tensions between the two nations.
The downward trend also affected most other precious metals, with silver dropping to $51.83 per ounce and platinum falling to $1,627.53, while palladium managed slight gains at $1,497.62 per ounce.
