Gold’s impressive rally took a turn when its price tumbled by more than 5% earlier this week.
The asset, considered a safe-haven by investors in times of uncertainty, saw its price fall rapidly as investors took profits amid the possibility of a reconciliation between Beijing and Washington.
On Tuesday, spot gold dropped as much as 6.3% to $4,082.03 a troy ounce. The major dip came after the metal hit an all-time high of $4,381.21 on Monday. U.S. gold futures ultimately settled 5.7% lower at $4,087.70, the steepest percentage decline recorded since April 2013.
Silver and platinum prices similarly declined on Tuesday, down 7% and 5%, respectively.
Analysts said the sell-off came on the heels of heavy buying in recent weeks that helped buoy the bullion to record levels. This year, gold prices have surged by more than 50%, surpassing levels seen during times of turmoil, such as the September 11 attacks, the 2008 financial crisis, and the Covid-19 pandemic.
In the past two months alone, gold prices have jumped 25%, partly in response to heightened demand amid rising government debt, political instability, and prospects for further interest rate cuts by the Federal Reserve.
However, with a sit-down between President Trump and President Xi Jinping forthcoming, prospects of reduced tensions pulled investors away from the safe-haven asset.
“I expect we’ll probably work out a very fair deal with President Xi of China… I think we’re going to work out something that’s good,” Trump said on Monday, per CNN.