Gold prices tumble below $5,000 as China holidays dent support

Gold's remarkable bull run hit a significant speed bump on Tuesday, with prices dramatically tumbling below the psychologically crucial $5,000 per ounce mark, primarily driven by reduced trading activity during China's Lunar New Year holiday.

Gold futures experienced a steep decline of $123.90, representing a 2.4% drop to $4,928.60 an ounce, interrupting what had been an impressive streak of gains in recent weeks. The precious metal had previously enjoyed eight consecutive weeks of positive performance, with last week's closing price at $5,022 an ounce.

Ole Hansen, head of commodity strategy at Saxo Bank, highlighted the critical role of Asian—particularly Chinese—demand in recent price movements. The holiday period traditionally represents a significant pause in trading volumes, which can amplify market volatility.

Simultaneously, the U.S. Dollar Index marginally strengthened to 97.15, adding additional pressure to gold prices. This dollar appreciation typically creates a headwind for dollar-denominated commodities like gold, as it makes the asset relatively more expensive for international buyers.

For precious metals investors, this development underscores the importance of monitoring geopolitical calendars and understanding how cultural and economic cycles can dramatically impact market dynamics. The current pullback should not be interpreted as a fundamental shift but rather a temporary market recalibration.