Gold pulls back after record rally

Spot gold was down 5.5% to a one-week low of $4,115.26 per ounce, its sharpest decline since August 2020

Gold prices were on track for their sharpest daily fall in five years on Tuesday, as investors booked profits after expectations of U.S. interest rate cuts and sustained safe-haven demand drove the metal to a record high in the previous session.

Spot gold was down 5.5% to a one-week low of $4,115.26 per ounce as of 1745 GMT, its sharpest decline since August 2020.

U.S. gold futures for December delivery settled 5.7% lower at $4,109.10 per ounce.

Prices scaled an all-time high of $4,381.21 on Monday and have gained about 60% this year, bolstered by geopolitical and economic uncertainty, rate-cut bets and sustained central bank buying.

Gold dips were being bought as recently as yesterday, but the sharp jump in volatility at the highs over the past week is flashing caution and may encourage at least short-term profit-taking, said Tai Wong, an independent metals trader.

Better risk appetite in the general marketplace early this week is bearish for the safe-haven metals, Jim Wyckoff, senior analyst at Kitco Metals, said in a note.

Analysts at Citi said in a note they expect an end to the ongoing U.S. government shutdown, as well as U.S.-China trade deal announcements, could contribute to gold prices consolidating over the next two to three weeks.

Spot silver declined 7.6% to $48.49 per ounce.

Silver is stumbling badly today and has dragged the entire complex lower, Wong said.

It appears we have a short-term top at $54 and while sentiment wobbles under $50, silver is likely to trade sideways with substantial volatility as long as gold remains relatively firm, Wong added.