Gold tumbled more than 5% on Tuesday, marking its steepest one-day drop since August 2020, as a stronger US dollar and heavy profit-taking pressured prices after recent record highs.
Reduced fears over US-China tensions, optimism that the government shutdown could end soon, and easing concerns over US regional banks boosted the Dollar to its highest level in almost a week.
This improved risk sentiment could reduce safe-haven demand and accelerate the pullback in gold. Even so, geopolitical risks in Eastern Europe and the Middle East, alongside expectations of Federal Reserve rate cuts, continue to offer a supportive backdrop, suggesting the metal could find buyers on dips.
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