Gold prices edged higher on Wednesday after the precious metal plunged more than 5% on Tuesday, bringing its stunning rally to an abrupt halt.
Gold, seen as a safe-haven asset in uncertain times, fell as investors took profits from record gains and as U.S. and Chinese officials are expected to meet again for a new round of trade talks.
Gold last traded at $4,141.48 a troy ounce at 1:46 a.m. ET on Wednesday, up less than 0.4%.
Spot gold fell 6.3% to $4,082.03 a troy ounce on Tuesday, after hitting a record high of $4,381.21 on Monday. U.S. gold futures settled down 5.7% to $4,087.70, the biggest drop since April 2013. Silver and platinum also fell sharply on Tuesday, down 7% and 5% respectively.
Analysts said the sell-off comes after weeks of heavy buying that pushed gold prices to overheated levels.
Gold has posted historic gains in 2025, rising more than 50%, outpacing previous periods of volatility such as after the September 11 attacks, the 2008 financial crisis and even the Covid-19 pandemic.
In the past two months alone, gold prices have risen 25%, driven by rising U.S. government debt, political uncertainty and speculation of further interest rate cuts from the Federal Reserve.
But optimism about an easing of trade tensions between Washington and Beijing and a rebound in the dollar prompted investors to book profits. Despite renewed tensions between the world's two largest economies in recent weeks, trade representatives from the two countries are expected to meet later this week, ahead of a planned meeting between Chinese leader Xi Jinping and U.S. President Donald Trump next week.
“I expect we will probably get a very fair deal with President Xi of China,” Trump said on Monday. “I think we're going to do some good things.”
Analysts also pointed out that the end of Diwali in India, the world's second largest gold consumer, reduced physical demand as another reason for the fall in gold prices.