Precious Metals Rout Signals U Turn After Record Surge

Highlights:

• Gold prices fell as much as 6.3 per cent, marking their biggest intraday drop in over 12 years, while silver plunged 8.7 per cent, extending the previous session’s decline.
• At the time of writing, spot gold was trading near US $4,000 an ounce, paring some losses after tumbling from record highs reached earlier in the week.
• The sell-off followed technical indicators showing overbought conditions, prompting investors to lock in profits after a months-long rally driven by central-bank buying and ETF inflows.

At the time of writing, both gold and silver are sliding sharply as investors react to a dramatic one-day reversal following months of explosive gains. The pullback follows what many analysts deemed an overheated rally.

Sharp Drop After Historic Highs

Spot gold dropped as much as 6.3 per cent on Tuesday — the biggest intraday slide in over a decade. At the time of writing, prices were hovering near US$4,000 an ounce after falling from peaks near US$4,400. Meanwhile, silver suffered an 8.7 per cent loss during the same session and continued weaker.

What’s Driving the Slide?

A key trigger: both metals had recently climbed to record highs amid sustained central-bank purchases and exchange-traded-fund inflows. Gold, for instance, was riding a nine-week winning streak and has gained roughly 55 per cent year-to-date. At the time of writing, that backdrop makes the current correction especially dramatic. Technical indicators showed markets were overheated and ripe for profit-taking — the sell-off reflects investors locking in gains rather than a fundamental collapse.

What’s Next for Investors?

While the abrupt decline has rattled market sentiment, many analysts caution this may be a pause rather than a paradigm shift. The underlying bullish themes — inflation concerns, geopolitical uncertainty, and weak real yields — remain intact despite the recent drop.

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