Gold has lost its shine for the second day straight, sliding hard from record highs earlier this week. Futures for the yellow metal dropped $43.70, or 1.06%, on Wednesday to close at $4,065.40 per ounce, after a brutal 5.74% plunge on Tuesday.
The back-to-back declines have erased nearly 8% of gold’s value since Monday, when it briefly touched an all-time intraday high of $4,398 per ounce, according to UBS.
Gold’s two-day selloff also hit miners. Shares of big players like Barrick were down more than 1%, extending losses as traders rushed to lock in profits after weeks of steady gains.
The downturn makes this gold’s worst performance since 2013, breaking what had been the strongest rally of the decade.
Traders cash out as volatility spikes
UBS analysts led by Wayne Gordon told clients the drop wasn’t about fundamentals but pure market mechanics, as a natural round of selloff hit the precious metal.
“If we look at adjustments to non-commercial positioning, we believe the decline was largely technical,” Wayne said. “With slowing price momentum and rising option volatility, more speculative investors decided to take profit.”
Despite the retreat, gold’s long-term gains remain staggering. Prices are still up more than 50% in 2025 and nearly 5% for October alone. UBS believes the core forces behind the year’s rally remain intact; inflation, tariffs, political uncertainty in the U.S., and the ongoing debate over Federal Reserve independence under President Donald Trump. “We believe it is premature to turn negative on gold despite the pause in the rally,” Wayne added.
Even after the pullback, gold’s performance this year has crushed nearly every other asset class. Futures have surged 54% year-to-date, far surpassing the S&P 500’s modest 14% advance. The metal even outpaced some of the biggest AI-related names like Nvidia and Meta Platforms, which had fueled Wall Street’s tech rally earlier in the year.
But the sudden collapse has sparked talk that the so-called “debasement trade,” where investors ditch the dollar for hard assets, might be running out of energy. The U.S. dollar index has gained almost 2% over the past month, outperforming the S&P 500 and signaling that money could be flowing back into cash.
In the last week alone, the dollar climbed 0.3%, while gold dropped 3%, tightening the pressure on traders who had been betting on further declines in the greenback.
Andrew Brenner, head of international fixed income at NatAlliance Securities, said the shift raises questions about whether this is the start of a bigger turn or just a quick technical correction.
“It begs the question as to whether this is starting a new trend or just a quick corrective move,” Andrew wrote. “But Central Banks are pretty well stocked with gold.”
Adding to the unease, Goldman Sachs traders noted that spot gold’s realized volatility relative to the S&P 500 hit its highest level since 2020, suggesting that price swings could become even wilder in the coming weeks. “Still, from a fundamental standpoint, the key narratives that have driven gold inflows, easing monetary policy, persistent inflation risks, and political uncertainties, persist, like the U.S. government shutdown and the recent spike in tariff-related risks,” Wayne wrote.
But for now, gold’s party is paused.
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