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Gold, silver tumble in biggest daily drop in years as stunning precious metals rally comes to a halt

Gold prices suffered their biggest daily drop in more than a decade as the dizzying rise in precious metals ground to a halt.

Futures for the yellow metal (GC=F) fell as much as 5.5% to around $4,141 per ounce, the biggest one-day drop in 12 years.

Silver futures (SI=F) also fell more than 7%, marking its biggest daily decline since 2021.

The move comes as trade tensions between Washington and Beijing are easing, with the rise in the US dollar and technical indicators pointing to overbought conditions.

“Gold has made several attempts to break above $4,400 since last Thursday, but has met resistance each time,” Trade Nation senior market analyst David Morrison wrote in a note Tuesday. he said.

The real question now, he added, is whether this slide represents the beginning of a much-needed correction after the stunning rally to date.

“The first major test to the downside is coming in around $4,000,” Morrison said. “But it is quite possible that this is all we get from the decline and buyers come back around $4,200.”

Investors bought the dip last Friday, when gold briefly fell more than 1.5%, a rare pullback during the last rally that saw precious metals and stocks reach all-time highs in October.

“This is just a bump in the road,” Sevens Report Research founder Tom Essaye told Yahoo Finance on Tuesday.

“There is still high inflation,” he said. “You have low real interest rates. You have geopolitical concerns, you have US government dysfunction. It’s all a bullish cocktail for gold.”

Gold has risen 28% since mid-August, driven by central bank purchases and inflows into gold-backed exchange-traded funds (ETFs). Investors turned to the metal to hedge against trade tensions and a flight from fiat currencies.

“If we suddenly reduce our debt substantially (which hasn’t happened yet) and peace emerges in the world, that would be what would break the back of gold,” Michele Schneider, chief strategist at Marketgauge.com, told Yahoo Finance recently.

Gold has risen 28% since mid-August, driven by central bank purchases and inflows into gold-backed exchange-traded funds (ETFs). (AP Photo/Jae C. Hong, File) · RELATED PRESS

Wall Street remains bullish on the precious metal for next year.

Bank of America analysts recently reiterated their “long gold” recommendation, predicting a peak of $6,000 per ounce by mid-2026.

Meanwhile, Wall Street is raising its gold price targets. Goldman Sachs predicts gold will reach $4,900 per ounce; this forecast will reach $4,900 by the end of next year, up from the previous estimate of $4,300.

JPMorgan analysts said: Yellow metal could hit $6,000 per ounce Until 2029.