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KEY TAKEAWAYS
- Gold suffered its biggest one-day loss in a dozen years on Tuesday.
- An end to the ongoing government shutdown and a trade deal between the U.S. and China would ease some of the uncertainty that has sent gold to a series of record highs recently, according to analysts.
- Even with Tuesday’s decline, the price of gold is still up 57% since the start of 2025. Other precious metals have also rallied this year.
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. It marked the biggest one-day percentage decline since June 2013 and the largest one-day dollar decline ever.
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.
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.
Shares of gold miners also fell on Tuesday, with the Van Eck Gold Miners ETF (GDX), reflecting shares of gold miners around the world, dropping 9.4%. Shares of Newmont (NEM), the world’s largest gold producer, dropped 9% to lead decliners in the S&P 500 index.
Some of Tuesday’s sell-off could be attributed to investors simply cashing in on the strong gains precious metals have enjoyed this year. Even with Tuesday’s losses, spot gold has surged 57% so far this year, with silver up 68%.
In addition, the selloff may reflect some trepidation ahead of a key inflation report expected later this week. The Bureau of Labor Statistics is expected to release September’s Consumer Price Index report on Friday. The government shutdown has delayed that and many other routine economic reports, helping contribute to gold’s attraction as a safe-haven asset.
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