WASHINGTON (dpa-AFX) - Gold prices extended their plunge from record highs on Wednesday, driven by profit taking and reversal in speculative positions amid fading safe-haven demand.
Spot gold fell 1.4 percent to $4,068.29 an ounce in European trade, after having slumped 5.3 percent on Tuesday, the biggest drop in five years following recent sharp gains to record highs, supported by central banks-led buying and worries about fiscal woes in developed countries. U.S. gold futures were down 0.60 percent at $4,084.64.
Spot gold fell as much as 6.3 percent at one point in the previous session, marking the sharpest decline in over 12 years.
The precious metal is undergoing a natural correction after months of steep gains, which left the market technically overbought.
Analysts say that volatility is likely to remain high in the near term as traders reassess global risk factors.
The dollar paused after a three-day rally as U.S-China tensions resurfaced, Ukraine war discussions stalled and expectations that the U.S. government shutdown will end soon dwindled.
U.S. President Donald Trump predicted on Tuesday that an upcoming meeting with China's leader Xi Jinping would 'yield a good deal' on trade but also warned that the meeting may not happen.
Separately, Trump said his plan for a swift meeting with Russian leader Vladimir Putin in Budapest, Hungary, was on hold because he doesn't want it to be a 'waste of time.'
The U.S. federal government remains shut down as the stalemate between Republicans and Democrats over expiring health-care subsidies persists.
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