Good morning. On April 16, 2013, gold suffered its largest documented one-day fall, plunging nearly 9% from around $1,501 to $1,361 an ounce, marking its biggest one-day drop since 1983.

Even the ultimate safe haven isn’t immune to panic, sometimes, gold bleeds too.

-Shaun A, Jonathan Kibbler, Jordon Mellor

MARKETS

Prices supplied by Google Finance as of 4:00am ET - stock prices as of close. Here is what the prices mean.

MARKET ANALYSIS

Gold finally took a breather and it wasn’t a small one.

After weeks of parabolic gains, XAU/USD fell over 5.5% on Tuesday, dropping more than $200 from Monday’s record high of $4,380. For context, that’s gold’s largest single-day decline since 2020.

And yet, the sentiment isn’t entirely bearish. Most traders are calling it what it looks like, a shakeout, not a collapse.

I’ve seen this pattern countless times: gold rallies too fast, the RSI overheats, and the market hunts for liquidity before another leg higher.

Gold’s selloff didn’t happen in isolation. With the U.S. Consumer Price Index (CPI) report due Friday, October 24, many were quick to lock in profits after a record-breaking run.

The U.S. Dollar Index (DXY) clawed back above 98.90, its strongest level this month, making gold more expensive for non-dollar buyers.

And let’s not forget, this week’s CPI data is crucial. The government shutdown delayed most key releases, so markets are starving for fresh clues on inflation and the Fed’s next move.

Despite Tuesday’s flush, gold’s macro backdrop hasn’t changed.

The Federal Reserve is still expected to cut rates twice before year-end, according to CME FedWatch, with almost 99% chance of another move in October.

That’s why the dip might attract bargain hunters, lower rates reduce the opportunity cost of holding gold, keeping the long-term bias bullish.

Looking at the chart, gold is now testing support near $4,100, sitting just above the 20-day SMA and the former breakout zone.

Below that, $4,000 marks the next line of defense, while $4,380 remains the ultimate resistance to beat.

The uptrend is still alive. The recent rejection at highs looks more like a reset than a reversal, especially since price remains comfortably above the 50 and 200-day moving average.

Trade and political tension remain the silent tailwind.

Trump’s back-and-forth with China from a 100% tariff threat to talks of a “good deal” adds uncertainty. Combine that with a still-unresolved U.S. government shutdown, and gold’s safe-haven appeal stays strong even after the plunge.

Tuesday’s drop was brutal, sure.. but every strong uptrend has to breathe.

I wouldn’t call this the end of gold’s run, just a reminder that even record rallies have limits.

As long as price holds above $4,000, the bigger picture remains bullish and traders waiting for a cleaner entry might finally get their chance.

-Shaun A

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TRADER INSIGHTS

The British pound slipped across the G10 board on Wednesday after the latest inflation data showed CPI stuck at 3.8%, missing the forecast of 4.0%.

On the surface, inflation coming in slightly cooler might sound like good news, and it is for the consumer.

But the number confirmed that price pressures are fading, which means the Bank of England (BoE) now has more breathing room to pivot toward rate cuts in the months ahead.

And that’s exactly what hit GBP this week.

UK short-term yields are starting to roll over.

The 2-year gilt yield has dropped to 3.75%, its lowest level since May this is a sign that bond traders are now pricing in easier policy ahead.

When yields fall, it’s the market’s way of saying: “The next move is likely a cut.”

That’s a big shift from just a few weeks ago, when traders were still debating whether the BoE will cut at all. 

Now, the conversation is about when cuts begin, not if.

Falling yields also make the pound less attractive to hold, especially against currencies backed by central banks that are still hawkish.

We know the European Central Bank (ECB) is neutral right now and not looking to ease rates further. 

If the Bank of England (BoE) decides now is the time to cut again, then EUR/GBP could breakout higher.

The price of EUR/GBP is trying to break through the resistance highs of 0.8750 with little luck so far. 

However, if this situation remains then a breakout would be more likely considering the divergence between central bank expectations. 

A break of this resistance could see EUR/GBP move towards the 2023 highs of 0.8900.

We have a Bank of England meeting on November 6th and that could decide the future of the GBP.

-Jonathan Kibbler

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Oil prices surged over 2% as supply-risk worries resurfaced, linked to delayed Donald Trump-Vladimir Putin talks and Western pressure on Asian buyers of Russian crude, while gold pulled back sharply after its rapid rally, reflecting investors taking profits in a mixed global risk-backdrop. (source:reuters)

GAMES

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