Gold dived more than 2 percent on Tuesday, its biggest one-day loss since early November, as signs of an improving economic outlook diminished safe-haven buying and a profit-taking commodities rout dragged prices off highs. Silver fell nearly 4 percent and platinum group metals also dropped sharply as investors unwound solid gains made on thin volume over the holidays, when silver hit a series of 30-year highs and palladium touched a near 10-year peak.
Gold had come within $10 of a new all-time high on Monday. "I think this is more of a healthy correction. The fear trade is backing off somewhat" after gold has recently rallied on global economic anxiety," said Mark Luschini, chief investment strategist of Janney Montgomery Scott, a financial services firm managing $50 billion client assets.
Spot gold fell 2.6 percent to $1,377.80 an ounce at 12:46 pm EST (1746 GMT), falling from Monday's intra-day peak of $1,423.57 an ounce. US gold futures for February delivery lost $44.2 an ounce to $1,378.70. The Reuters-Jefferies CRB index dropped 2 percent in its sharpest one-day fall since mid-November, with investors singling out commodities as having risen too far, too fast during the holiday period. Wall Street dropped less than 1 percent after Monday's rally.
Spot silver, which has outperformed gold since September, fell 4.2 percent to $29.37 an ounce, retreating from the previous session's peak of $31.22, its highest since 1980. Platinum slid 1.5 percent to $1,736 an ounce, while palladium lost 3.4 percent to $763.08.