Gold Suffers Steepest One-Day Drop Since 2021 as Trade and Fed Concerns Ease
Gold prices plummeted on Wednesday, recording their sharpest single-day loss in nearly four years, as easing trade tensions and signs of stability in U.S. monetary policy undercut demand for the precious metal.
After soaring to record highs above $3,500 an ounce earlier this week, gold futures tumbled by $125.30, or 3.7%, to settle at $3,294.10 — the biggest one-day percentage drop since June 2021. The decline followed a more modest dip Tuesday, when prices slipped from an intraday peak of $3,509.90 to close at $3,419.40.
Analysts said the recent surge in gold — fueled by fears over trade policy, inflation, and geopolitical strife — may have entered a blow-off phase, a parabolic run-up often followed by a steep correction. Jonathan Krinsky of BTIG noted that gold had surged 27% above its 200-day moving average, a rare technical condition that historically signals a pullback is likely.
While some worry the metal has peaked, others argue the long-term bullish trend remains intact. “There’s no evidence that $3,500 is the top,” said Michael Armbruster of Altavest. “This looks more like a normal correction within a broader uptrend.”
The retreat was triggered in part by reports that the White House may ease tariffs on Chinese imports — a major driver behind gold’s rise — and by President Trump’s softened tone toward Federal Reserve Chair Jerome Powell. The perceived reduction in economic uncertainty weakened the case for gold as a hedge, just as the U.S. dollar showed signs of regaining stability.
Jim Wyckoff of Kitco.com said the gold rally may be nearing a time-based climax, if not a price top. “These parabolic moves are often the last stages of mature bull markets,” he noted, adding that a break below $3,200 could signal more technical damage ahead.
Even with the recent drop, gold has posted an extraordinary run. From 2022’s levels near $1,600, prices had more than doubled due to inflation fears, global conflicts, and trade uncertainty. And while Wednesday’s sell-off is notable, it’s just a 9% pullback from gold’s recent gains.
Trevor Yates of Global X ETFs said the correction doesn’t alter the bullish outlook. “The move is more about investor positioning than any fundamental shift,” he explained. With central banks still accumulating gold and concerns about stagflation persisting, Yates believes the pullback could present an attractive entry point for long-term investors.
Ultimately, while gold’s meteoric rally may be pausing, many analysts say the bull market is far from over.
