Gold prices tumbled sharply on Tuesday, marking their steepest single-day fall in five years, as investors moved to lock in profits after a stellar rally.

The decline followed a stronger US dollar and a softer tone from President Trump on trade relations with China. His remarks that the US wanted to “help China, not hurt it” calmed broader market nerves and reduced demand for safe-haven assets such as gold.

After hitting an all-time high of $4,381.21 on Monday, prices had been met with persistent buying on dips. However, recent volatility near record levels hinted at growing nervousness among traders following gold’s exceptional 2025 surge.

Today’s selloff likely reflects a mix of profit-taking and renewed optimism around a potential US–China deal, alongside caution ahead of key US inflation data due Friday. Analysts at Citi noted that a resolution to the ongoing US government shutdown and progress on trade negotiations could further improve market sentiment, exerting additional pressure on gold.

Technical Outlook – XAU/USD

Technically, gold formed a double-top pattern on the four-hour chart earlier in the day, with a confirmed break below the neckline. Based on this setup, the projected target for the move sits around $4,020/oz, suggesting more downside potential.

Two short-term scenarios appear likely:

Retest Scenario: A rebound toward the neckline near $4,220/oz, followed by rejection and continuation lower toward $4,020.

Direct Continuation: Continued selling pressure without a retest, driving prices directly toward the $4,020 objective.

Both remain plausible, and traders are watching shorter timeframes for confirmation of the next move