Gold fell nearly 5% as the dollar rose, and traders pulled out their money after a record high

Gold prices fell on Tuesday At their steepest drop in a single day Years ago, it fell nearly 5% as a stronger US dollar and heavy profit-taking halted the precious metal’s rise to a record high above $4,300 an ounce.

As of Tuesday afternoon, gold futures were trading at $4,143.90 per ounce, down $215.50, or 4.94%.

This decline came after Monday’s close at $4,359.40. When the metal reached a new all-time high.

Sell-offs indicate gold Biggest single-session drop since April 2013 It is the first meaningful correction after a months-long rally fueled by safe-haven buying and expectations of interest rate cuts by the Federal Reserve.

Prices opened at $4,371, rose briefly to a high of $4,393.60 – then fell steadily during morning trading to a low of $4,090 before stabilizing.

“I think it’s as simple as it being a risk-off day after a big rally,” said Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors.

“It’s not just gold, silver and other precious metals are also down. In the past 10 weeks, gold and silver inflows have reached $34.2 billion. This is the largest ever in history.”

Link described the development as “very frothy”.

The US dollar index rose nearly 0.7% on Tuesday morning, its biggest rise this month.

A stronger dollar makes gold more expensive for foreign buyers, which often leads to sharp reversals after big rallies.

The latest recession It comes after just one day of gold for a brief period The price of gold has surpassed $4,380, gaining more than 50% year-to-date driven by geopolitical risks, global inflation and a growing belief that the Fed is preparing to ease monetary policy by the end of the year.

According to the World Gold Council, China, India and Turkey continued their steady purchases of gold during October, boosting demand even as futures prices fell.

This sharp movement was also reflected in mining stocks. Both Newmont Corp and the VanEck Gold Miners ETF fell more than 9% on Tuesday.

Investors piled into gold during the third quarter amid continued inflation and stock market volatility.

The metal’s appeal as a hedging tool strengthened further in October as political tensions escalated in the Middle East and Europe, leading to a rush towards safe-haven assets.

Futures markets continue to expect a 60% chance of a Fed rate cut in December, according to data from CME Group – the main driver of bullion’s earlier rally.

Low interest rates usually weaken the dollar and support gold by reducing the opportunity cost of holding non-yielding assets.

But traders warned that volatility could persist if upcoming inflation or employment data surprise to the upside, tempering the Fed’s dovish pivot.

Asian demand is expected to remain strong until the end of the year, especially in India ahead of Diwali and in China, where retail purchases rose as investors sought refuge from the weak yuan.