Gold falls to 3-week low, pulling further away from $4,000: 'The sell-off has been relentless'

Gold extended declines on Tuesday to a three-week low as optimism over a US-China trade deal continued to put pressure on the safe-haven asset.

Bullion futures dropped more than 1% to hover near $3,970 per troy ounce, while gold for immediate delivery fell to around $3,930 ahead of a highly anticipated meeting on Thursday between President Trump and China’s leader Xi Jinping.

The move extended declines in the precious metal, which were sparked last Tuesday with the biggest drop in more than a decade.

“It has been a feature of this correction so far that, except for a brief pause last Thursday, the sell-off has been relentless,” said David Morrison, senior market analyst at online broker Trade Nation, on Tuesday.

“Gold is no longer overbought,” he added. “Despite this, gold will find support at some stage, and it’s quite likely that there will be a sharp reversal when it does."

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The recent moves mark a reversal of gold’s strongest rally in more than 40 years as the precious metal moved from $2,700 at the start of the year to around $4,350 earlier this month.

On Tuesday, futures were up roughly 43% since the start of the year.

“It is natural to see investors and speculators take some profits after this torrid move,” Shree Kargutkar, senior portfolio manager at Sprott Asset Management, told Yahoo Finance on Tuesday.

Wall Street remains bullish on the precious metal on expectations of continued rate cuts from the Federal Reserve.

UBS analysts believe gold should rebound in the near-term, reaching $4,700 by the end of the first quarter of 2026.

Read more: Thinking of buying gold? Here's what investors should watch for.

"We have highlighted the potential for volatility given the scale and speed of the rally, but we believe precious metals should remain supported by a combination of macroeconomic, fundamental, and momentum-driven factors," UBS Global Wealth Management chief investment officer Ulrike Hoffmann-Burchardi wrote last week.

Bank of America analysts recently reiterated their "long gold" recommendation, forecasting a peak of $6,000 per ounce by mid-2026.

Meanwhile, Goldman Sachs sees gold hitting $4,900 per troy ounce by the end of next year, up from its previous prediction of $4,300.Gold fell to a three-week low on Tuesday, sinking further below the $4,000 level. (AP Photo/Mike Groll, File)·ASSOCIATED PRESS

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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