Team siliconindia

• Gold and silver prices continue to drop after massive rallies sparked profit-taking.
• Gold saw its biggest intraday fall in 12 years, with silver also sharply lower.
• Analysts see the correction as healthy, with long-term support still intact.

Gold and silver prices continued their slide, extending losses from record highs earlier this year. The sharp declines come amid widespread profit-taking and concerns that the precious metals had entered bubble territory.

On Wednesday, gold fell as much as 2.9% to $4,004.26 per ounce, following Tuesday’s steep 6.3% drop, its biggest intraday decline in over 12 years. Silver also dipped over 2%, building on a 7.1% loss from the previous session.

Analysts say the sharp rallies in recent months, driven by central bank demand, fears over fiscal instability, and rate cut expectations, had set the stage for a correction. “Profit-taking moves started to snowball”, said Tim Waterer of KCM Trade, noting the strong temptation for traders to lock in gains.

Meanwhile, global markets were mixed. Asian shares fluctuated and US stock futures edged lower, while Treasury yields dropped amid lingering concerns over the US government shutdown. A stronger dollar and positive US-China trade developments also added pressure on gold.

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Despite the pullback, experts maintain a bullish long-term outlook. ANZ analysts said positioning in gold futures had likely reached excessive levels, triggering the selloff, but underlying demand remains strong.

As seasonal buying slows and market data remains limited due to the US shutdown, investors may soon see the dip as a fresh buying opportunity. “Corrections are natural”, noted Fawad Razaqzada of City Index, “and could attract sidelined investors back in."