Easing trade tensions and a stronger dollar trigger 5.5% plunge, but analysts call it a “bump in the road” for long-term bulls
Gold prices experienced their steepest daily decline in more than twelve years on Tuesday, ending a powerful months-long rally that had driven the precious metal to record highs. December futures for gold (GC=F) fell as much as 5.5% to around $4,141 per troy ounce, marking their biggest one-day drop since 2013. Silver futures (SI=F) also fell sharply, losing more than 7% for their worst performance since 2021.
The sudden sell-off followed a series of macroeconomic shifts, including easing trade tensions between Washington and Beijing, a rebound in the U.S. dollar, and technical indicators signaling overbought conditions after months of gains. “Gold had several attempts to push above $4,400, but on each occasion, it ran into resistance,” said David Morrison, senior market analyst at Trade Nation. “The first major test to the downside comes around $4,000.”
Despite the correction, many analysts remain optimistic about gold’s broader trajectory. “This is just a bump in the road,” said Tom Essaye, founder of Sevens Report Research. “You still have elevated inflation, low real interest rates, geopolitical tensions, and U.S. government dysfunction — that’s a bullish cocktail for gold.”
Gold’s surge earlier this year was fueled by strong central bank purchases, increased investor demand for exchange-traded funds (ETFs) backed by gold, and a flight from fiat currencies. The metal has risen roughly 28% since mid-August, driven by investors seeking safety amid global uncertainty.
Wall Street forecasts remain bullish. Goldman Sachs expects prices to reach $4,900 per ounce by the end of 2026, while Bank of America predicts a possible peak of $6,000 per ounce by mid-2026. JPMorgan analysts see gold potentially hitting the same level by 2029 — reaffirming that despite the current drop, the long-term outlook for the yellow metal remains strong.
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