Gold, Silver drop as trade uncertainty halts record-breaking rally

Gold, which had surged over 60 percent since the beginning of the year to reach multiple all-time highs, dropped as much as six percent in Tuesday’s session and continued to decline in Asian trading. At one point on Wednesday, it touched a low of $4,000 per ounce, a sharp reversal from Tuesday’s record peak of $4,381.51. Silver, which had mirrored gold’s impressive rally, also plummeted.

Profit-taking and a stronger dollar drive sell-off

Analysts attributed the sudden correction to a mix of profit-taking, hopes for easing China-US tensions, and a strengthening dollar. The months-long rally in bullion had been driven by expectations of interest rate cuts, central bank purchases, falling bond yields, and a weakening dollar, alongside investor fears about the global economy.

However, as optimism increased for a possible thaw in relations between Beijing and Washington, traders hurried to lock in profits from one of the most remarkable runs in commodity markets in years.

“Gold’s glorious charge finally met gravity,” said Stephen Innes, Managing Partner at SPI Asset Management. “After months of one-way conviction and relentless inflows, volatility in gold has now surpassed equities, echoing the pandemic’s manic heartbeat.”

Innes observed that although the rally had paused, the long-term structural demand for gold remains strong, with central banks continuing to increase reserves and investors still questioning the stability of fiat currencies amid rising global debt.

Mining stocks see gains across Asia-Pacific

The selloff reverberated through equity markets, hitting gold miners and producers across the region. In Sydney, Northern Star Resources dropped more than 8 per cent, while Perseus Mining declined over 6 per cent. Hong Kong-listed Zijin Gold International fell 4 per cent, Shandong Gold Mining slipped nearly 2 per cent, and Merdeka Copper Gold in Jakarta decreased around 4 per cent.

These declines mirrored wider weakness across Asian equities, where markets fell after two days of notable gains.

Asian markets fall following Trump’s remarks

Asian bourses came under pressure after President Trump’s mixed remarks about his upcoming meeting with Xi Jinping. Trump initially told reporters that he expected to finalise a “good” trade deal with Xi at the APEC Summit in South Korea next week, saying, “I think we’re going to have a very successful meeting. Certainly, there are a lot of people waiting for it.”

But he then added, “Maybe it won’t happen. Things can happen where, for instance, maybe somebody will say, ‘I don’t want to meet. It’s too nasty. But it’s really not nasty.’”

The remarks sowed uncertainty among investors, causing stocks in Hong Kong, Shanghai, Sydney, Wellington, Taipei, and Manila to decline. Tokyo also fell as traders locked in profits after a strong rally driven by political stability in Japan. Wall Street’s subdued performance overnight further dampened sentiment, leading to a cautious start in Asia.