Gold prices have experienced a significant downturn, reverting to levels not seen since 2020. This decline comes amid a rebound of the U.S. dollar and profit-taking by investors following record highs achieved earlier in the week.
Gold Prices Decline Significantly
On Tuesday, gold prices fell sharply, marking the steepest daily drop in five years. From a peak of $4,381.21 per ounce on Monday, spot gold dropped by 5.5% to $4,115.83 per ounce. This marked its lowest point in one week and represented the most considerable loss since August 2020.
- Gold’s peak: $4,381.21 per ounce (Monday)
- Current price: $4,115.83 per ounce (Tuesday)
- Percentage drop: 5.5%
Market Influences
The fall in gold prices has been attributed to a rise in the dollar index, which increased by 0.4%. This change has made gold more expensive for investors holding other currencies. Additionally, the anticipation of a potential interest rate cut by the Federal Reserve has impacted gold trading.
U.S. gold futures for December delivery also declined, dropping 5.3% to $4,129.20 per ounce. Geopolitical uncertainties and sustained demand from central banks had previously driven gold prices up by approximately 60% this year.
Silver and Other Precious Metals
Silver prices faced a severe decline as well, falling more than 8.4% to $48.06 per ounce. Analysts noted that silver’s performance has affected the overall market for precious metals.
- Spot silver price: $48.06 per ounce
- Percentage drop: 8.4%
- Silver’s peak: $54 per ounce
In addition, platinum prices decreased by 7% to $1,523.30 per ounce, while palladium fell by 6.6% to $1,398 per ounce.
Upcoming Market Indicators
Investors are preparing for the release of the U.S. Consumer Price Index (CPI) report for September, which is expected to indicate a year-on-year rise of 3.1%. This report was delayed due to the ongoing U.S. government shutdown.
Furthermore, the market is closely watching President Donald Trump’s planned meeting with Chinese President Xi Jinping next week, which may have implications for economic conditions and investor sentiment.
As interest rates remain a pivotal factor, analysts expect the Federal Reserve to lower rates by 25 basis points at its next policy meeting. In a low-interest environment, gold, as a non-yielding asset, typically gains favor among investors.
