Spot gold plunges 6%, marking the largest drop in over 12 years; analysts warn of bubble risk

BlockBeats News, October 21, according to the Financial Times, gold prices plummeted by 6% on Tuesday, marking the largest single-day drop since April 2013. The historic rally in gold has paused as India’s Diwali gold buying season comes to an end.

After reaching a high of $4,381 per ounce on Monday, gold prices plunged to $4,082 on Tuesday, which the market generally sees as a long-overdue correction. The historic rally this year has accelerated in recent weeks, with a 25% increase in just the past two months.

Nicky Shiels, Head of Metals Strategy at MKS PAMP SA, stated: "The market is showing signs of a bubble, mainly driven by an extremely overbought condition—this rally is peaking. The fact that gold surged $1,000 in six weeks indicates that prices are excessively overvalued, and we are at an irrational high."

Analysts pointed out that the recent rebound of the US dollar, as well as the lack of futures market position data due to the US government shutdown, have jointly contributed to this most dramatic gold price plunge since 2013.