HONG KONG - Gold and silver tumbled for a second day on Wednesday, bringing a rally in the precious metals to a juddering halt.
Bullion has seen an eye watering run-up since the turn of the year, helping it climb more than 60 percent and hitting multiple records, with observers suggesting it could soon hit $5,000 an ounce.
The rally has been built on a range of issues, including a weaker dollar, expectations of interest rate cuts, falling bond yields and central bank buying.
Lingering worries about the global outlook have also boosted its haven status, while a fear of missing out on the surge has equally played a part.
But the buying reversed on Tuesday, tanking as much as six percent at one point, and continued its retreat in Asia, hit by profit-taking, hopes for a further easing of China-US tensions and a stronger dollar.
At one point Wednesday, it hit a low of $4,000 -- a day after chalking up a record peak of $4.381.51. Silver, which has been riding the coattails of the rally, also plunged.
The retreat hit gold miners and producers. Northern Star Resources in Sydney dived more than eight percent, with Perseus Mining losing more than six percent.
And Hong Kong-listed Zijin Gold International shed more than four percent and Shandong Gold Mining was off nearly two percent, while Merdeka Copper Gold dived around four percent in Jakarta.
"Gold’s glorious charge finally met gravity. After months of one-way conviction and relentless inflows," said Stephen Innes at SPI Asset Management. "Volatility in gold has now surpassed equities, echoing the pandemic's manic heartbeat."
However, he added that the commodity would likely still retain support among investors.
"But beneath the surface, the structural demand for insurance remains.
"Central banks will keep stacking reserves, investors still question the durability of fiat promises, and the monetary plumbing remains swollen with debt and distortion."