Gold prices fall most since 2013

The global gold market suffered a dramatic setback on Tuesday, with prices tumbling more than 5 percent in what analysts say is the steepest single-day decline in more than ten years.

Gold futures fell 5.2 percent to around US$4,130 per ounce by Tuesday afternoon, after earlier plunging as much as 6.3 percent - the largest intraday drop since June 2013, when the precious metal experienced a similar freefall.

The decline triggered a broader metals sell-off, as silver and platinum - which have soared 60 percent and 66 percent respectively so far this year, outpacing gold's 54 percent rise - also dropped 6.7 percent and 7.2 percent.

Market analysts say the correction was inevitable following months of frenetic buying that pushed precious metals to record highs.

"We're witnessing a technical correction after a very robust rally," said Suki Cooper, commodities analyst at Standard Chartered. "The universe of investors has expanded rapidly, and many are now taking profits."

Bart Melek, global head of commodity strategy at TD Securities, echoed that view, telling Bloomberg that traders were "taking profits after a very strong rally," warning that such fast-paced gains were historically unsustainable.

Gold prices tend to fall when the US dollar strengthens, as it makes bullion more expensive for international investors. On Tuesday, the dollar index rose 0.4 percent, further weighing on the metal.

Despite the pullback, many major financial institutions remain optimistic about gold's long-term potential. Earlier this month, Bank of America became the first major bank to forecast gold hitting US$5,000 per ounce by 2026, citing structural shifts in investor sentiment and inflationary pressures.

HSBC also maintained a bullish stance, recently raising its average 2025 gold price target to US$3,950, up from US$3,125.

Other banks have taken a more cautious approach: JPMorgan predicted US$2,950 by year-end, while Citigroup and Goldman Sachs set their forecasts at US$3,000 for late 2025 and mid-2026, respectively.

Silver - which has seen explosive gains this year - fell sharply on Tuesday, trading just below US$48 per ounce. Bank of America raised its price forecast for the metal to US$65, but analysts warned that volatility could increase as liquidity expands and demand slows.

Goldman Sachs analysts said they still expect silver prices to benefit from "elevated economic and policy uncertainty," particularly amid ongoing US government shutdown fears and potential Federal Reserve rate cuts.

Platinum, another safe-haven metal, dropped over 7 percent amid the sell-off. Analysts attributed its strong year-to-date performance to robust demand from the jewellery and automotive sectors, especially as the metal is used in catalytic converters.

The surge in metals over the past year has been driven by global inflation, geopolitical tensions, and trade policy shifts, including President Donald Trump's renewed tariff measures.

Lina Thompson, a Goldman Sachs commodities strategist, said metals have "performed well during periods of elevated uncertainty," while hedge fund billionaire Ray Dalio previously called gold "the one asset that does very well" during downturns.

Meanwhile, silver's rally has been compounded by an inventory shortage in London, the world's major trading hub for the metal.

"There's no liquidity available currently," said Anant Jania of Greenland Investment Management.

While analysts expect further volatility in the coming weeks, most agree the correction was overdue — and that gold's long-term trajectory remains upward as investors continue seeking refuge from unstable equity and bond markets.