After gold’s big plunge, here’s what history shows could happen next

Core Viewpoint - Gold prices experienced a significant decline, with a notable one-day drop of 5.7%, raising questions about whether this marks a peak or a necessary correction in the market [3][4]. Price Movements - Gold for December delivery had rallied 56% year-to-date, peaking at $4,398 per ounce before the recent drop [2]. - Following the one-day decline, gold futures settled at $4,065.40, reflecting a further decrease of 1.1% [4]. Market Reactions - The recent drop was attributed to "gold tourists" being squeezed out and money managers selling to protect gains, indicating a shift in investor sentiment [3]. - Historical analysis shows that after similar declines of 5% or more, gold prices have typically rebounded, averaging a 1.82% increase one month later [5]. Market Sentiment - Analysts suggest that corrections like the recent decline are healthy for the market, with the potential for future gains despite current volatility [6]. - There is skepticism regarding gold's effectiveness as a hedge against the U.S. dollar, particularly in light of the debasement trade strategy [7].