XAU/USD: Gold Prices Shed 2.4% in Worst Plunge Since Early 2023

Precious metal moved further away from its record high of $2,430 per ounce. Is it time for a correction?

Key Points:

• Gold drops in worst day since early 2023.
• Investors scale back bets on safe haven.
• US dollar gains ground as risk is back.
• Gold prices XAUUSD fell sharply to start the week, slipping more than 2.4% for the asset’s worst day since February 2023. The yellow metal tumbled from the session’s opening price of $2,388 to a closing price of $2,330 per ounce. The drop erased all gains from the past five trading sessions and led gold further away from its record high of $2,430. What’s more, another 1% was erased early on Tuesday, with prices dipping to $2,300.
• Some analysts attributed the plunge to elevated profit-taking amid a cooldown in Middle East tensions. Others said that froth in the precious metal market was subsiding and that a correction was taking place. Whatever the reason, gold seems to be booking a much-needed reprieve after a breakneck rally. Over the past two months, gold has added more than 17% to its valuation — a rare sight for a fairly dormant asset.
• As investors scaled back their haven bets — gold is considered a safe haven asset — they ramped up their long positions on the US dollar and other risk assets. The US dollar index DXY powered higher on Monday and stocks across the board followed right after.