Gold prices witnessed a sharp correction on Tuesday, falling nearly 2% after touching record levels in the previous session. The sudden dip came as investors began booking profits, easing the metal’s recent bullish run that was fueled by expectations of U.S. interest rate cuts and strong safe-haven demand.
Spot gold dropped 2.1% to $4,264.91 per ounce, retreating from Monday’s all-time high of $4,381.21. Similarly, U.S. gold futures for December delivery declined 1.9% to $4,278.50 per ounce. Meanwhile, the U.S. dollar index gained 0.3%, making gold costlier for foreign investors and further pressuring prices.
Analysts Expect Temporary Corrections
Market experts believe the current pullback is a healthy correction in an otherwise strong uptrend.
“Gold prices are still positioned for further gains, but the rally has been unusually fast,” said Nitesh Shah, Commodities Strategist at WisdomTree. “Each time we hit a new high, short-term pullbacks are likely as traders lock in profits.”
The recent surge in gold was largely supported by growing expectations that the Federal Reserve will start easing monetary policy soon, alongside increased demand for safe assets amid global economic uncertainty.
Eyes on U.S. CPI Data
Investor attention now turns to the U.S. Consumer Price Index (CPI) data, scheduled for release this Friday. Economists expect the report to show a 3.1% year-on-year rise for September, which could further influence the Fed’s policy stance. Markets are widely anticipating a 25 basis point rate cut at the Fed’s upcoming meeting next week.
Outlook
Despite Tuesday’s decline, analysts maintain that gold remains in a long-term bullish phase, supported by weaker real yields, geopolitical tensions, and sustained investor interest in safe-haven assets. However, traders are advised to brace for short-term volatility and profit-taking phases as the metal consolidates around record levels.
