Gold prices fell for the second consecutive day, pressured by a strengthening US dollar and a wave of profit-taking by investors following record-breaking gains in recent sessions.
This decline comes amid heightened volatility in global markets, as investors await key US economic data for further guidance.
Spot gold dropped 1.4% to $4,067.31 per ounce as of 09:41 GMT, marking its lowest level in nearly two weeks. Earlier in the session, it had climbed as high as $4,161.17 per ounce. Meanwhile, December gold futures slipped 0.7% to $4,081.30 per ounce.
Dollar Strength Adds Pressure as Markets Cool Post-Rally
The US dollar index held near a one-week high, adding downward pressure on gold prices. A stronger dollar makes dollar-denominated bullion more expensive for holders of other currencies.
On Tuesday, gold experienced a 5.3% drop — its steepest one-day decline since 2020 — after touching an all-time high of $4,381.21 per ounce in the previous session.
Despite this sharp correction, gold remains up approximately 54% year-to-date, supported by a confluence of factors, including:
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Rising geopolitical tensions, particularly in the Middle East and Eastern Europe.
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Global economic uncertainty, including slowing growth in China and sovereign debt risks.
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Expectations of US interest rate cuts by the Federal Reserve.
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Strong inflows into gold-backed ETFs, reinforcing gold’s status as a safe-haven asset.
Overbought Territory Triggers Market Correction
Ricardo Evangelista, senior analyst at ActivTrades, commented on the recent pullback:
“The significant gains seen in recent weeks pushed gold into overbought territory from a technical standpoint, prompting many traders to close positions and secure profits amid a lack of fresh bullish catalysts.”
From a technical perspective, gold is finding key support at its 21-day moving average, currently around $4,005, a level that may serve as a potential rebound zone if selling pressure persists.
All Eyes on US Inflation Data
Investor attention is now focused on the upcoming US Consumer Price Index (CPI) report, due Friday, which may offer fresh insights into the Federal Reserve’s monetary policy path.
Should the data reveal a cooling in inflation, it could strengthen expectations that the Fed may proceed with an interest rate cut in its next meeting.
According to a Reuters poll, most economists anticipate a 25 basis-point rate cut by the Fed next week, followed by another possible reduction in December.
Political Uncertainty Casts Shadow Over Markets
On the political front, uncertainty returned after a planned summit between former US President Donald Trump and Russian President Vladimir Putin was postponed. Questions also remain over a potential meeting between Trump and Chinese President Xi Jinping.
Rona O’Connell, an analyst at StoneX, noted:
“We are still operating in an age of uncertainty, which likely means that any significant dips in gold prices will attract renewed buying interest.”
Other Precious Metals Performance
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Silver fell 0.9% to $48.28 per ounce, extending its losses after a sharp 7.1% drop on Tuesday.
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Platinum edged down 0.1% to $1,549.53.
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Palladium declined 1% to $1,394.52.
Sources: Reuters, ActivTrades, StoneX, General Market Data
