Gold Plunges From Record High With Biggest One-Day Decline in 12 Years

LONDON (October 22) Gold's year-long rally hit a wall Tuesday, with the price of the precious metal falling the most it has in a dozen years.

Spot gold dropped as much as 6% to a low of about $4,120 per troy ounce on Tuesday after reaching yet another all-time high of nearly $4,400 on Monday.1 It marked the biggest one-day percentage decline since June 2013 and the largest one-day dollar decline ever.23

The price of silver, which has surged this year alongside gold, also plunged, falling more than 8% during Tuesday trading to as low as $48.40 per troy ounce.4

Gold, silver and other precious metals have soared this year amid global trade tension, inflation concerns and economic uncertainty. The rally in precious metals has also been fueled in recent weeks by concerns about the impact of the U.S. government shutdown and ongoing fears about unsustainable government debt globally.

Why This Matters to Investors

Gold has risen steadily in recent months as investors have turned to the traditional safe haven amid economic uncertainty and market volatility. The sharp decline on Tuesday marked the first significant step backwards for the precious metal, which remains up more than 50% for the year.

Long considered a hedge against economic uncertainty and inflation, gold fell Tuesday as Citi Research issued a note saying that an end to the U.S. government shutdown and potential U.S. trade deal with China "can contribute to a consolidation (of gold prices) over the next 2-3 weeks." Citi said it's maintaining its 0-3 month price target of $4,000.

It remains unclear when the shutdown, which is about to enter its fourth week, will end, as legislators remain at loggerheads. On the trade front, President Donald Trump has expressed optimism that a deal will be reached, as he gets set to meet with his Chinese counterpart, Xi Jinping, next week.

Investopdia