Gold prices fell over 4% today, as the dollar firmed and investors booked profits after expectations of US interest rate cuts and sustained safe-haven demand drove the yellow metal to a fresh record high in the previous session.
Spot gold fell 4.1% to a nearly one-week low at $4,178.23 per ounce, as of 1358 GMT, its steepest fall since November 2020.
US gold futures for December delivery fell 3.9% to $4,190.80 per ounce.
Prices scaled an all-time peak of $4,381.21 on Monday and have gained about 60% this year, bolstered by geopolitical and economic uncertainty, rate-cut bets and sustained central bank buying.
"Gold dips were being bought as recently as yesterday, but the sharp jump in volatility at the highs over the past week is flashing caution and may encourage at least short-term profit-taking," said Tai Wong, an independent metals trader.
The dollar index rose 0.4%, making bullion more expensive for holders of other currencies.
Wall Street looked poised for a calm start, with futures trimming earlier losses as investors assess a wave of largely positive earnings from corporate giants.
"Better risk appetite in the general marketplace early this week is bearish for the safe-haven metals," said Jim Wyckoff, senior analyst at Kitco Metals, in a note.
Traders now await the US consumer price index (CPI) data, delayed due to the ongoing US shutdown, due on Friday. September's figures are expected to show a 3.1% year-on-year rise. Markets expect that the Federal Reserve will cut interest rates by 25 basis points at its meeting next week.
Gold, a non-yielding asset, tends to benefit in a low-interest rate environment.
Investors are also awaiting US President Donald Trump's upcoming meeting with Chinese President Xi Jinping next week.
Spot silver dropped 6.5% to $49.08 per ounce.
"Silver is stumbling badly today and has dragged the entire complex lower," said Wong.
"It appears we have a short-term top at $54 and while sentiment wobbles under $50, silver is likely to trade sideways with substantial volatility as long as gold remains relatively firm."
Elsewhere, platinum shed 4.3% to $1,569.31 and palladium lost 6.6% to $1,397.25.
