XAU/USD: Gold Prices Drop 2.4% in Worst Dive Since Early 2023

MARKET NEWS

Gold prices have moved further away from its record high of $2,430 per ounce. Is it time markets witness a correction in the precious metal?

Key Points:

1- Gold drops in worst trading day since early 2023.
2- Investors scale back bets on the safe haven.
3- US dollar gains ground, increasing gold’s risk

XAUUSD Price Analysis

Gold fell sharply at the start of the week, slipping more than 2.4% for the asset’s worst day since February 2023. The precious metal took a fall 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. Tuesday’s trading session saw another 1% erased from the yellow metal, with prices dipping to $2,300.

Many 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 bets on the safe haven, they ramped up their long positions on the US dollar and other risk assets. The US dollar index (DXY) saw significant gains on Monday and stocks across the board followed shortly after.