Onome Amuge
Gold prices suffered their sharpest single-day fall in more than a decade on Tuesday, ending months of gains that had driven the precious metal to record highs.
Spot gold plunged as much as 6.3 per cent to $4,082 an ounce before recovering slightly to trade near $4,100 in late dealings, after hitting an all-time high of $4,381 on Monday. The drop marked a reversal for a market that had climbed almost $1,000 in just six weeks, fuelled by central bank buying, a weaker dollar and demand for safe assets amid geopolitical uncertainty.
Analysts said the sell-off was partly triggered by signs of a thaw in trade tensions between the US and China and by a firmer dollar, which makes bullion more expensive for holders of other currencies. The US Dollar Index rose 0.36 per cent to 98.94.
The lack of updated futures positioning data, a consequence of the ongoing US government shutdown, was also cited as a factor that amplified volatility by depriving traders of insight into speculative flows.
Despite Tuesday’s heavy decline, gold remains up more than 50 per cent this year, supported by persistent central bank accumulation and strong investor inflows into exchange-traded funds. Global gold ETFs saw inflows of $26bn in September alone, reflecting heightened demand for defensive assets.
However, analysts cautioned that some of the seasonal demand underpinning prices is waning. Buying in India, the world’s second-largest consumer, typically peaks ahead of the wedding season but has begun to cool, traders said.
Technical indicators suggest initial support around $4,100 an ounce, followed by $4,059, the previous record high now seen as a key level. A break below that threshold could see prices test the 20-day moving average near $4,000, while resistance is expected around $4,200 to $4,300.
Market participants are now looking ahead to US inflation data due on October 24 and the Federal Reserve’s policy meeting next week for further direction. Geopolitical developments also remain in focus, after President Donald Trump confirmed he would meet China’s President Xi Jinping next week in a bid to ease trade frictions.
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