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Dow Jones NewsOct 21, 7:07 PM UTC
MW Gold logs its biggest one-day selloff in years. Is it a bump in the road or have prices topped out?
By Myra P. Saefong and Gordon Gottsegen
Gold's latest move feels more like a pit stop than the end of the trip, according to Libertas Wealth Management
Gold prices recorded their biggest one-day percentage hit in 12 years on Oct. 21.
Precious metals took a notable hit on Tuesday, with gold marking its biggest one-day percentage decline in more than a decade. It's a selloff that many analysts would say was overdue - but one that still may not signal an end to a rally that's lifted prices to all-time highs.
"It kind of feels like gold just hit an unexpected pothole on an otherwise open highway," Adam Koos, president and senior financial adviser at Libertas Wealth Management Group, told MarketWatch on Tuesday. "It's been cruising along for a while, magnificently, and every now and then, the market just slams the brakes to make sure the passengers are still awake."
Gold for December delivery (GC00) (GCZ25) settled at $4,109.10 an ounce, down 5.7% on Comex. That was the largest one-day percentage decline since June 20, 2013, according to a Dow Jones Market Data analysis of FactSet figures.
Prices touched a fresh record high on Monday before their sharp retreat Tuesday, raising the question of whether the metal has "topped out" or merely encountered a "blip" before moving higher again, said Fawad Razaqzada, market analyst at StoneX.
See: Gold prices are so high, even central banks are feeling FOMO
Tuesday was a day of "heavy selling in the precious metals space, one that was always going to come one of these days given how prices were previously just sky rocketing," he wrote in a note Tuesday. "Some would argue what took it so long."
While the "debasement trade" and investor defensiveness helped push the metals rally, Razaqzada pointed out that several factors eased that defensiveness this week. This includes de-escalating trade tensions between the U.S. and China, reduced safe-haven demand, a rebounding U.S. dollar DXY and gold investors ready to take profits.
However, today's dip may not mean that the rally is over.
It is "far too early to suggest that the broader bull trend has ended," said Razaqzada. "While corrections are natural, it is worth pointing out that many investors missed out on the big rally. Soon, they may step in to buy the dip, which should keep the sell-off contained."
Read: Gold's record-breaking rally could keep running thanks to growing demand from this group of investors
Even with Tuesday's losses, futures prices for gold are still nearly 56% higher year to date.
In a post on X Tuesday, Juan Carlos Artigas, regional CEO for the Americas and global head of research at the World Gold Council, said that while some may see gold as expensive, "compared to global stock markets, it's not."
He added: "Prices don't exist in a vacuum. Value is always relative to the broader market environment."
It's normal for financial markets to experience pullbacks following periods of rapid ascent like gold has experienced, Artigas told MarketWatch. And while momentum has played a role in gold's performance in the past few weeks, "we believe that its rally has also been driven by strong fundamentals, such as a structurally higher level of geoeconomic uncertainty, a steady increase in U.S. money supply, and a push towards lower interest rates," he said in emailed comments.
"Our analysis suggests that the gold investment market is not saturated and has room to grow," he said.
Gold remains under-owned, according to the WGC. Its chart of the week released Monday shows that the value of gold, as represented by the weekly average London Bullion Market Association's afternoon gold fix prices, relative to global equities, represented by the MSCI World Index XX:990100, is well below historic highs from the 1980s.
The value of gold, based on the weekly average London Bullion Market Association's afternoon gold fix prices, and the MSCI World Index are well below historic highs, says Juan Carlos Artigas of the World Gold Council.
"We maintain that gold remains strategically under owned ... with scope for further upside supported by constructive fundamentals and elevated global liquidity," the WGC said in its report.
Koos of Libertas Wealth Management also pointed out that gold is still under-owned when you zoom out to that gold/MSCI ratio.
"In my experience, true tops rarely happen when people still don't believe in the rally - and in the end, as the saying goes, "the trend is your friend, till the end, when it bends," he said, with the reference to a "bend" referring to potential signs of weakness.
On Tuesday, however, Koos said that drop in gold prices "doesn't look like the big selloff everyone's been waiting for." Instead, he said, "it looks more like a recalibration after a long, smooth stretch."
"The metal's been overextended and long in the tooth for weeks, so some profit-taking or even a shakeout like this can help to clear out the tourists before a potential next leg higher," said Koos.
So for now, gold's latest move "feels more like a pit stop than the end of the trip," he said.
-Myra P. Saefong -Gordon Gottsegen
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10-21-25 1507ET
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