Gold plunges nearly 5% as dollar surges, traders cash out after record high

Core Insights - Gold prices experienced a significant decline of almost 5%, marking the steepest one-day drop in years, attributed to a surging US dollar and heavy profit-taking after reaching record highs above $4,300 per ounce [1][2][6] Price Movement - As of noon Tuesday, gold futures were trading at $4,143.90 per troy ounce, down $215.50, or 4.94%, from the previous close of $4,359.40, which was a new all-time high [1][2] - The selloff represents gold's sharpest single-session decline since April 2013 and follows a months-long rally driven by safe-haven buying and expectations of Federal Reserve rate cuts [2][6] Market Dynamics - The US Dollar Index strengthened nearly 0.7%, its largest rise this month, contributing to the decline in gold prices as a stronger dollar makes gold more expensive for foreign buyers [3][6] - Inflows into gold and silver over the past 10 weeks reached $34.2 billion, the highest in history, indicating a strong demand for these precious metals [3] Demand Trends - Despite the price drop, demand for gold remains steady, particularly from China, India, and Turkey, as these countries continued their gold purchases through October [10] - Asian demand is expected to remain robust through year-end, especially in India ahead of Diwali and in China, where retail buying has surged due to a weakening yuan [18] Impact on Mining Stocks - The sharp decline in gold prices also affected mining stocks, with Newmont Corp. and the VanEck Gold Miners ETF both down more than 9% on Tuesday [10]