Gold Falls Further. What’s Driving This Brutal Selloff.

Gold prices plummeted on Tuesday, as investors opted to take some profit following a stellar recent run. (Justin Sullivan/Getty Images)

Key Points

• Front month gold futures fell 1.06% to settle at $4,097.80 an ounce, extending losses after a 5.7% drop on Tuesday.
• Newmont shares fell 2.9% in early trading, following a 9% decline in the previous session. They were up 1.3% in afternoon trading.
• Despite the recent pullback, gold is still on track for its best year since 1979.

Gold prices fell again Wednesday, extending bullion’s losses from Tuesday’s brutal selloff.

The most actively traded gold futures contract ticked down 0.3% to $4,097.80 an ounce. Front month gold futures lost 1.06%, to settle at $4044.40, according to Dow Jones Market Data. Shares in Newmont , one of the world’s largest gold miners, were up 1.3%, having tumbled 9% the previous session.

Gold plummeted 5.7% on Tuesday, its largest drop in more than 12 years. Investors were locking in profit after a record-breaking run that had gold performing like a growth asset, not the haven it traditionally has been.

Created with Highcharts 9.0.1Gold futures per Troy ounceSource: FactSet

Created with Highcharts 9.0.1Oct. 19Oct. 224,0004,0504,1004,1504,2004,2504,3004,3504,4004,450

“The slump happened despite a decline in nominal and real bond yields, which usually help to support gold prices,” Deutsche Bank macro strategist Henry Allen said. “Given it’s relatively more attractive to hold a zero-interest asset like gold when bonds aren’t yielding as much.”

Allen added: “So in many respects, it looked like a classic pullback after a relentless bull run over recent weeks,” noting that even after Tuesday’s sharp selloff, gold is still on course for its best year since 1979, when the Iranian Revolution sparked an oil crisis and a surge in inflation.

The big question for gold investors is whether this reversal is a sign of what’s to come.

While there’s an argument that bullion looks overbought, the same factors that have driven its surge this year—a central-bank buying spree and the prospect of lower interest rates—could provide some support.

“Despite the drop, gold remains up nearly 60% in 2025 as investors position for a softer Federal Reserve policy, continued central‑bank diversification away from the dollar, and demand for hedges against fiscal and geopolitical risk,” said Neil Welsh, head of metals for Britannia Global Markets. “The options market is now pricing extreme volatility, suggesting traders expect further large swings in coming sessions.”

Other precious metals also took a hit on Tuesday, but they were having a better time of it on Wednesday. Front month silver edged higher 0.02% to $47.46 an ounce, and front month platinum rose 1.1%, to $1,536.00.

Colin Fenton, who heads commodities research for 22V Research, sees both gold and silver advancing higher. The ride will be bumpy, though, in part because of the dynamics involved in producing, locating, and moving the metals themselves—a process often forgotten about in futures trading.

“The volatility is not solely an artifact of paper futures and options trading,” Fenton said. “It is not disconnected from the physical world.”

Write to George Glover at george.glover@dowjones.com and Nate Wolf at nate.wolf@barrons.com