Gold prices tumbled by more than 8% to break below the $5,000 mark on Friday as the dollar strengthened on the imminent appointment of a new U.S. Federal Reserve Chair, though the safe-haven metal remained set for its biggest monthly gain since 1982 after chalking up multiple record peaks.
Other precious metals also dropped sharply as profit-taking kicked in.
Spot gold was down 5% at $5,124.37 an ounce by 1132 GMT, having slid to $4,957.54 earlier in the session. U.S. gold futures for February delivery fell 3.9% to $5,118.40.
Gold scaled a record peak of $5,594.82 on Thursday and is still on track for a more than 18% gain this month, heading for a sixth straight monthly gain.
"The expected appointment of Kevin Warsh as Fed Chair, who is perceived to be a more hawkish pick than other contenders, appears to have put downward pressure on precious metals prices," said Hamad Hussain at Capital Economics.
U.S. President Donald Trump is expected to reveal his pick for the next Fed chair on Friday, with former Fed Governor Warsh seen as a frontrunner. Warsh has pushed for a smaller Fed balance sheet, contrasting with Trump’s inclination towards looser monetary policy.
The U.S. dollar rose on Friday, clawing back some of this week’s slide to a four-year low, making dollar-priced gold more expensive for overseas buyers. [USD/]
Physical gold premiums in India rose to their highest in more than a decade on strong investment demand ahead of a likely duty increase. Premiums in China jumped after a pickup in investment and jewellery demand. [GOL/AS]
