Gold and silver prices tumbled sharply, marking their steepest one-day declines in more than a decade as investors took profits following a historic surge in precious metals.

Spot gold slid as much as 6.3%, the largest single-day drop in over twelve years, while silver fell 8.7%, as traders unwound bullish bets built up during the recent rally. Analysts said the correction was triggered by stretched technical indicators and a wave of profit-taking after both metals hit record highs last week.

“A fall of more than five percent in gold is extremely rare,” said Alexander Stahel, a Switzerland-based resource investor. “It’s the kind of move you’d expect only a handful of times in hundreds of thousands of trading sessions.”

The pullback interrupted a months-long upswing driven by expectations that the US Federal Reserve will begin cutting interest rates before year-end and by investors seeking shelter from ballooning fiscal deficits. According to Frank Monkam, head of macro trading at Buffalo Bayou Commodities, the decline reflects “a healthy positioning reset” after markets became overheated. He noted that gold has technical support around $4,000–$4,050, adding that ETF inflows and central-bank demand should eventually fuel another rally.

Helen Amos, commodities analyst at BMO Capital Markets, described the selloff as typical behavior after a trend-driven rise. “When momentum traders dominate, it’s easy for the pendulum to swing the other way once prices start slipping,” she said.

At the close in New York, spot gold was down 5.3% to $4,125.22 an ounce, while silver lost 7.1% to $48.71. A stronger US dollar also weighed on sentiment, reducing the appeal of non-yielding assets.

Adding to the pressure was thinner trading liquidity due to India’s Diwali holiday, which temporarily paused demand from the world’s second-largest gold consumer. Meanwhile, silver’s retreat followed a dramatic squeeze in London last week that had pushed prices beyond the 1980 Hunt Brothers’ record. The dislocation sent traders rushing to ship metal to the UK to relieve supply tightness, even as inventories in Shanghai and New York fell sharply.

Part of the earlier boom was fueled by concerns about credit risks in the US economy, prompting a record $8 billion inflow into gold-backed ETFs last week — the largest since tracking began in 2018, according to the World Gold Council.

“When that much capital pours in over a few days, it’s natural for some of it to flow back out once short-term traders lock in profits,” Amos said.

With the ongoing US government shutdown halting publication of the Commodity Futures Trading Commission’s weekly positioning report, traders have had little insight into hedge fund exposure. Ole Hansen of Saxo Bank warned that the absence of data makes markets more vulnerable to abrupt corrections if speculative long positions have become too crowded.

Retail investors — who joined the rally in growing numbers this year — have also been quick to scale back holdings amid heightened volatility. Yet analysts say the broader outlook for gold remains positive, supported by steady central-bank purchases and demand from emerging markets.

“We still believe the long-term gold story is intact,” said Amos. “Our forecast sees prices averaging around $4,500 next year. Pullbacks like this are part of a healthy cycle — no market moves in a straight line.”

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