Gold prices continued its downward trend on Tuesday morning, falling more than seven per cent since its peak on October 20. Some experts have called it the most significant movement in over a decade.

Globally, spot prices slid to $3973 per ounce at 9:30 am UAE time, while silver fell 0.3 per cent to $46.66.

In Dubai, the price of 24K fell by more than Dh12 to Dh479 on Tuesday morning, as opposed to Dh491.50 on Monday morning. Similarly, 22K, 21K and 18K also slipped to Dh443.50, Dh425.25, and Dh364.25 per gram, respectively.

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“The sell-off right after achieving these highs was one of the most significant ones in about 12 years,” said Vijay Valecha, Chief Investment Officer, Century Financial.“It is important to note that prices had been rising for nine consecutive weeks since August, taking prices about $1,000 higher. Such a drastic rally lasting for this long was not sustained, as history shows, with an inevitable degree of profit booking settling in.”

Several analysts have pointed out the progressing trade talks between the world's largest economies - US and China - are the reason for the steady decline of gold.

“This has raised optimism in the risk markets, fading away gold's safe haven shine,” said Valecha.“A preliminary consensus on topics such as export controls, fentanyl, and shipping levies was reached by both sides recently, with US Treasury Secretary even stating that the threat of 100 percent tariffs had passed, significantly cooling geopolitical tensions.”

He said that there is increasing optimism ahead of the important Trump-Xi summit later this week, as investors expect a small step toward a trade agreement that would ease some tensions and boost the economy. However, he predicted that gold prices will continue to fluctuate.

“Despite a softer-than-expected CPI print that came in at 3 per cent last week, raising street consensus for aggressive rate cuts, the shift in momentum for gold prices earlier in the week was strong enough to close the week 3.29 per cent lower,” he said.“On a technical basis, the RSI on the daily chart remained in overbought territory for weeks before the sell-off, suggesting a potential reversal, with prices now finding support near the 21-day EMA and a breakout retest level near $4,060.”

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