In one of the sharpest market reversals in a decade, gold prices plunged 5.7% to $4,109 per ounce on Tuesday, wiping out nearly $1.75 trillion in market value, while Bitcoin soared to a new all-time high of $114,000, underscoring a widening divergence between traditional and digital assets.

After climbing above $4,380 per ounce on Monday — its highest level ever — gold tumbled dramatically the next day, marking its largest single-day fall since April 2013. Analysts attributed the correction to a mix of profit-taking, rising U.S. dollar strength, and a shift in investor sentiment following months of sustained gains.

“Gold made an incredible run this year with prices up over 60 percent. This was an archetypal case of short-term profit-taking after a parabolic move,” a market expert explained.

Gold crashes 5.7%, Bitcoin hits $114,000 in stark divergence

Factors behind sudden sell-off

The downturn was driven by multiple factors:

The U.S. dollar’s rebound made dollar-denominated assets like gold more expensive for foreign investors.
Easing tensions in the U.S.-China trade dispute reduced safe-haven demand.
Stronger corporate earnings in the U.S. shifted investor attention toward risk assets.
The end of Diwali, India’s peak gold-buying season, also removed a crucial source of physical demand.

The sell-off rippled across other precious metals, with silver plunging 8.7% to $49.70, its worst decline since 2021. Shares of major gold mining companies also slid sharply in response.

Bitcoin defies gravity amid gold’s fall

While gold faced its harshest correction in years, Bitcoin continued its upward momentum, gaining 2% to hit $114,000 — a new record high.

The rally triggered over $150 million in short liquidations, reinforcing the cryptocurrency’s strong bullish trend and highlighting the growing divergence between investor preferences for digital versus traditional assets.

Market observers noted that the simultaneous fall in gold and rise in Bitcoin reflect a generational and strategic shift in investment behavior, with more traders viewing cryptocurrencies as viable long-term stores of value.

Despite the sudden drop, analysts remain optimistic about gold’s long-term trajectory. Factors such as global geopolitical uncertainty, inflation risks, and financial market volatility continue to support demand for the precious metal as a strategic hedge.

“While the short-term correction is harsh, the long-term fundamentals for gold remain intact,” one analyst said.