Silver prices also erased about 7 percent as investors took some profits.
Gold prices suffered their sharpest single-session selloff since 2020, declining more than 5 percent on Oct. 21.
On the COMEX division of the New York Mercantile Exchange, gold futures fell by $231, or 5.3 percent, to a one-week low of $4,128.40 per ounce.
Despite the yellow metal’s selloff, prices are still up by more than 56 percent this year.
Silver, the sister commodity to gold, also suffered a significant drop. The white metal fell $3.49, or 6.8 percent, to $47.89 an ounce. Like gold, silver prices remain up almost 64 percent year to date.
Market watchers have been cautious during the precious metal’s meteoric ascent, with technical indicators pointing to an overbought situation.
While Joe Tigay, portfolio manager of the Rational Equity Armor Fund, has been optimistic about gold for years, the latest rally has been concerning to him.
“Everyone talks about how risky stocks are, how we’re in a bubble. But gold? Gold has become the ‘risk-free’ trade. Nobody questions whether it’s lofty,” Tigay said in a note emailed to The Epoch Times. “That’s precisely when you should question it.”
He pointed to enormous consumer demand for physical gold—in the United States and abroad—citing reports of Costco selling out of gold bars and coins in record time.
“When people line up in the streets to buy an asset, when the narrative becomes one-sided, when the trade gets this crowded—that’s your signal. I don’t care what the asset is. This is how manias end,” Tigay said.
For weeks, analysts have suggested the fierce appetite for gold had been driven by safe-haven demand, economic and geopolitical uncertainty, the government shutdown, and the Federal Reserve immersed in a rate-cutting cycle.
Lower U.S. Treasury yields have also supported gold’s ultra-bullish run since falling interest rates reduce the opportunity cost of holding non-yielding bullion. The benchmark 10-year yield fell below 4 percent on Oct. 21, and other long-term yields have also diminished.
In addition to traders booking profits, gold prices came under pressure from a strengthening U.S. dollar, which impacts the affordability of the metal for foreign investors.
By Andrew Moran
