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A jewelry shop in Dubai, United Arab Emirates, on October 20. / Source: EPA・Yonhap News

Gold prices fell sharply on October 21 (U.S. time), ending a relentless rally that had pushed the precious metal to record highs.

On the New York Mercantile Exchange, December gold futures dropped 5.7% to $4,109.10 per troy ounce (31.1g), compared with Monday’s record spot close of $4,381.52. It was the steepest one-day fall in 12 years, according to the Wall Street Journal and the Financial Times, which cited Dow Jones market data.

Silver and platinum prices also slumped. Silver futures fell 7.2% to $47.45 per ounce, while platinum declined by about 8%.

Analysts said the sell-off was triggered by renewed optimism over U.S.-China trade relations after the United States and Australia signed a rare-earth cooperation agreement, raising expectations of a broader trade deal between Washington and Beijing. As risk appetite recovered, investors sold off safe-haven assets such as gold.

Still, gold remains up 55% so far this year and has only fallen back to levels last seen on October 10.

Market experts view the retreat as a natural correction following months of overextension. Over the past two months alone, gold had surged nearly 25%, pushing the market into what analysts describe as an overheated phase.

Nicky Shiels, an analyst at Swiss precious-metals firm MKS PAMP, told the Financial Times that the correction shows the “extreme overbought bubble is deflating” and that the rally has now entered a mature stage.

“The fact that gold rose by $1,000 in just six weeks shows how excessive the move was,” she said. “We’re now in the stratosphere.”