Spot gold plummeted 6%, marking the largest decline in over 12 years, analysts warn of bubble risks

According to the Financial Times, gold prices plummeted 6% on Tuesday, marking the largest single-day drop since April 2013. This historic surge in gold prices has paused as the Diwali gold buying season in India comes to an end. After reaching a high of $4,381 per ounce on Monday, gold prices fell sharply to $4,082 on Tuesday, with the market widely viewing this as a delayed correction. The historic rise this year has accelerated in recent weeks, with a 25% increase in just the past two months. Nicky Shiels, head of metal strategy at MKS PAMP SA, stated, "The market has shown signs of a bubble, with the main catalyst being the extreme overbought condition—this rally is nearing its peak. The fact that prices surged $1,000 in six weeks indicates that gold is overvalued, and we are at an irrational high." Analysts pointed out that the recent rebound of the dollar and the lack of futures market position data due to the U.S. government shutdown have contributed to the most severe drop in gold prices since 2013