After a big rally, gold prices have seen a sharp decline. In contrast, the dollar has risen.
Reuters reported that gold prices hit their lowest one-day low in five years on Tuesday.
The news agency reported that gold prices fell 5.5 percent to $4,115.83 an ounce in instant trading at 10:51 a.m. Eastern Daylight Time (EDT), the biggest drop since August 2020.
U.S. gold for December delivery fell 5.3 percent to $4,129.20 an ounce.
Earlier on Monday, gold prices hit an all-time high of $4,381.21.
Geopolitical and economic uncertainty, coupled with bets on a Federal Reserve interest rate cut, have led to gold prices rising nearly 60 percent this year.
Silver prices also fell on a day when gold prices fell. The metal fell 8.4 percent to $48.06 an ounce.
Two other important metals – platinum and palladium – also fell in price. The former fell 7 percent to $1,523.30, while the latter fell 6.6 percent to $1,398.
Dollar index rises
The dollar index rose 0.4 percent against the backdrop of a decline in gold prices. As a result, holders of other currencies will have to buy dollars at a higher rate, making it difficult for them to buy gold.
In such a situation, traders are eagerly awaiting the US Consumer Price Index report for September, which is due on Friday. The report has been delayed due to the ongoing government shutdown.
The consumer price index is expected to increase by 3.1 percent in September this year compared to the same period last year.
On the other hand, market participants are expecting the Federal Reserve to cut interest rates by 25 basis points at its policy meeting next week.
When the central bank’s interest rates are low, you can usually profit by buying gold.
Investors are also eagerly awaiting President Donald Trump’s meeting with Chinese President Xi Jinping next week.
