Gold fell over 1% early Wednesday, following a 6% plunge on Tuesday that marked its steepest one-day drop since 2020.
Spot gold, which hit $4,381 an ounce on Monday, plunged as much as 6.3% to $4,082 before finding some footing later in the session and fell to $4,002 overnight in Asian trading. By 10:00 GMT, it was trading around $4,085.
A mix of profit-taking, easing US–China trade tensions, and expectations of progress in global trade talks dampened bullion’s safe-haven appeal.
The retreat comes after comments from US President Donald Trump, who said an upcoming meeting with Chinese President Xi Jinping could yield a “good deal” on trade, though he added the talks “may not happen.” His remarks lifted market sentiment and reduced appetite for traditional safe-haven assets like gold.
The sell-off highlights how stretched the market had become. Investors have been growing increasingly nervous over the sustainability of the rally, which sent gold soaring to record highs earlier this week.
Attention now turns to the US Consumer Price Index (CPI) report due on Friday, expected to provide critical guidance ahead of the Federal Reserve’s interest rate decision next week. The ongoing US government shutdown continues to cloud the data calendar, adding another layer of uncertainty.