Gold prices fell more than 7% toward $4,500 an ounce on Monday, extending losses from the previous session after the metal suffered its steepest one-day decline in more than a decade.
Friday’s selloff was triggered by reports that U.S. President Donald Trump plans to nominate Kevin Warsh, widely seen as a more hawkish candidate, to lead the Federal Reserve, prompting investors to reassess the outlook for interest rates and monetary policy.
The decline was compounded by profit-taking following a prolonged rally that had pushed gold to record highs. That surge had been driven by strong central bank buying and the so-called debasement trade, as investors shifted into physical assets from currencies and bonds amid rising concerns over government debt levels.
Gold’s advance had also been supported by heightened geopolitical and economic uncertainty, as well as fears over the Federal Reserve’s independence, reinforcing demand for safe-haven assets.
Momentum buying amplified gains during the rally, with heavy purchases from Chinese speculators adding froth to prices. Analysts said the same speculative flows likely intensified the downturn as investors rushed to lock in profits.
