Gold falls from record high with biggest one-day drop in 12 years

Gold’s year-long rally came to a standstill on Tuesday, with the price of the precious metal falling by the most in twelve years.

The spot price of gold fell as much as 6% to a low of about $4,120 an ounce on Tuesday after hitting another all-time high of about $4,400 on Monday. This represents the largest single-day percentage decline since June 2013 and the largest single-day dollar decline ever.

The price of silver, which has risen this year alongside gold, also fell more than 8% during Tuesday trading to reach a low of $48.40 per ounce.

Gold, silver and other precious metals have risen this year amid global trade tensions, inflation fears and economic uncertainty. The rally in precious metals has also been fueled in recent weeks by concerns about the impact of the US government shutdown and ongoing concerns about unsustainable government debt globally.

Gold, long seen as a hedge against economic uncertainty and inflation, fell on Tuesday, as Citi Research issued a note saying the end of the US government shutdown and a potential US trade deal with China “could contribute to a boost (gold prices) over the next 2-3 weeks.” Citi said it is maintaining a 0-3 month price target of $4,000.

It remains unclear when the lockdown, which is about to enter its fourth week, will end, as lawmakers remain at loggerheads. On the trade front, President Donald Trump expressed optimism about reaching an agreement, as he prepares to meet his Chinese counterpart Xi Jinping next week.

Gold miner stocks also fell on Tuesday, with the Van Eck Gold Miners ETF (GDX), which reflects stocks of gold miners around the world, falling 9.4%. Shares of Newmont (NEM), the world’s largest gold producer, fell 9% to lead decliners in the S&P 500.

Some of Tuesday’s sell-off can be attributed to investors simply taking advantage of the strong gains precious metals have enjoyed this year. Even with Tuesday’s losses, the spot price of gold is up 57% so far this year, with silver up 68%.

Additionally, the sell-off may reflect some concerns ahead of the headline inflation report expected later this week. The Bureau of Labor Statistics is expected to release its September Consumer Price Index report on Friday. The government shutdown delayed this and many other routine economic reports, which helped contribute to gold’s appeal as a safe-haven asset.