FX.co ★ Gold Extends Decline After Historic Drop

Gold declined by over 3%, falling below $4,800 per ounce on Monday, as it continued to lose ground following significant losses in the previous session. This marked the sharpest fall in the precious metal's value in over a decade. The downturn on Friday was triggered by news that US President Donald Trump intends to nominate Kevin Warsh, known for his hawkish stance, as the head of the Federal Reserve. The correction also followed extensive profit-taking after a robust rally that elevated gold prices to unprecedented levels. This surge was primarily driven by substantial central bank demand and a strategy known as the debasement trade, where investors shifted from currencies and bonds to tangible assets due to growing concerns about escalating government debt. The prevailing geopolitical and economic uncertainties, coupled with fears about the Federal Reserve's independence, further bolstered gold's status as a safe-haven asset. Additionally, momentum buying intensified the gains as a flood of purchases from Chinese speculators added fuel to the rally and contributed to its subsequent downturn.