Gold loses 5% after record levels economy

Gold prices fell 5%, today, Tuesday, as the price of the dollar rose and investors took profits, after it recorded a new record level supported by strong demand for safe havens, and expectations that the Federal Reserve (the US central bank) would reduce interest rates.

Gold fell in spot transactions by 5.4% to $4,120 per ounce.

Prices rose to their highest levels ever at $4,381.21 yesterday, Monday, recording a 60% increase this year due to a combination of geopolitical and economic uncertainty, continued purchases in central banks, strong demand for investment and expected cuts in US interest rates.

Take profits

“Yesterday’s decline in the price of gold led to buying, but the sharp jump in volatility reached its highest levels last week, which raises caution and may encourage profit-taking in the short term at least,” said Tai Wong, an independent metals trader.

The dollar index rose 0.25% at the time of preparing this report, making the precious metal more expensive for holders of other currencies.

The Wall Street Stock Exchange stabilized at the open, and futures contracts trimmed their previous losses as investors evaluated a wave of major companies’ announcements of quarterly profits.

“Increasing risk appetite in the overall market at the beginning of the week heralds a decline in safe-haven metal prices,” Jim Wyckoff, senior analyst at Kitco Metals, said in a note.

Investors are now focused on the US Consumer Price Index data scheduled to be released on Friday, and the data is expected to show that the index rose 3.1% on an annual basis in September, which reinforces market expectations that the Federal Reserve will cut interest rates by 25 basis points at its meeting next week.

Gold, which does not generate a return, tends to rise during periods of low interest rates.

As for other precious metals, their performance was as follows:

• Spot silver fell 6.5% to $48.97 per ounce.
• Platinum fell by about 5.2% to record $1,549.96 per ounce.