"Should I Have Sold My Baby's Gold Ring Earlier?"... Gold Prices Plunge 5.7% in Largest Drop in 12 Years

Gold Prices Soar 60% This Year as Investors Take Profits
Safe-Haven Demand Wanes on Prospects of U.S.-China Trade Agreement
Silver and Platinum Also Weaken in Tandem

International gold prices have recently halted their sharp rise and recorded the largest drop in 12 years since 2013. Silver and platinum prices also weakened alongside gold.

This is interpreted as a result of investors taking profits after the perception spread that recent gold and silver investments had become overheated, and as expectations for easing trade tensions grew ahead of the upcoming U.S.-China summit next week, leading to a calming of safe-haven demand.

On the 18th, as gold prices soared and a shortage of gold bars occurred, an employee showed a sample gold bar to a customer visiting the Jongno main branch of the Korea Gold Exchange in Jongno-gu, Seoul. 2025.2.18. Photo by Kang Jinhyung

On the 21st (local time) at the New York Mercantile Exchange (COMEX), December gold futures closed at $4,109.1 per ounce, down 5.7% from the previous day. This sharp decline came just one day after hitting an all-time high, marking the largest single-day drop since 2013.

The drop in silver prices was even greater. December silver futures fell 7.2% from the previous day to $47.45 per ounce. Platinum also plummeted by 8% for December futures contracts.

This decline in gold and silver prices is analyzed as a result of profit-taking sales triggered by concerns over overheating following the recent surge.

Since the beginning of this year, gold prices have soared about 60%, continuing a rally. This was driven by a surge in demand for safe-haven assets due to factors such as the increase in U.S. federal government debt, doubts about the U.S. dollar, and concerns over President Donald Trump's trade wars.

However, the sell-off for profit-taking accelerated the decline on this day. In addition, the strengthening of the U.S. dollar increased the relative price burden of gold for holders of other currencies, further deepening the drop. Furthermore, as the largest Hindu festival 'Diwali' ended and the wedding season began in India, the world's second-largest gold consumer, the gold buying season approached its end, contributing to weaker demand.

With expectations for easing trade tensions growing ahead of the U.S.-China summit next week, demand for safe-haven assets also appears to have weakened. President Trump and Chinese President Xi Jinping are expected to hold talks and reach a trade agreement on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea. As a result, global tensions are easing and risk aversion sentiment is subsiding.

Bart Melek, Global Head of Commodity Strategy at TD Securities, said, "After the recent strong rally in the precious metals market, investors are taking profits," adding, "This sharp rise was not historically sustainable."

Suki Cooper, an analyst at Standard Chartered, commented, "Given the sharp rise in metal prices since the start of this year, the recent sell-off is not surprising," and analyzed, "As the investor base has expanded rapidly, the market has entered a technical correction phase."

However, there are also forecasts that the correction will be limited.

Ole Hansen, Head of Commodity Strategy at Saxo Bank AS, said, "Amid growing concerns about a correction and subsequent price stagnation, traders' caution has increased in recent days," adding, "The true strength of the market is revealed during correction phases. This time will be no exception, and as underlying buying interest remains, the extent of the correction will be limited."