Gold tumbles on profit-taking after record highs earlier this week (NYSEARCA:GLD)

Gold futures tumbled more than 2% on Friday, in what some analysts see as a “typical” pullback following record high prices reached earlier in the week.

It was the first weekly decline for gold after three straight weeks of gains, as gold and other assets have been bid upward as investors price in a Federal Reserve pivot to rate cuts as early as September.

Gold’s sharp slide began overnight in Shanghai, potentially signaling “anxiety over the worsening recession in jewelry and retail investment demand worldwide, most especially in China, the metal’s no. 1 consumer,” BullionVault director of research Adrian Ash told Marketwatch.

But since gold dropped alongside bonds and stock prices suggests that, “short term, this is just a retreat in the Fed rates-cut trade,” Ash said.

“Besides profit taking, the market is down on this narrative of a soft landing; it could put pressure on the price of gold, as investors will shift money from a safe to more riskier investment,” Allegiance Gold’s Alex Ebkarian told Reuters.

Front-month Comex gold (XAUUSD:CUR) for July delivery closed Friday -2.3%, resulting in a 0.7% drop this week to $2,395.50/oz, while front-month July silver (XAGUSD:CUR) ended -3.1% on Friday to $29.30/oz, roughly flat for the week.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)

The probability of former President Trump winning the upcoming U.S. election rose to 70% from 60% the week before, with gold benefiting from his improved chances, J.P. Morgan analysts say, according to Dow Jones.

A second Trump presidency, to the extent it tries to implement aggressive tariff and trade policies, is seen as likely to accelerate the diversification out of U.S. bonds and into gold by emerging market central banks, particularly in China, JPM argues.

Such tailwinds for gold are viewed by the market as more likely to offset potential pressures from yield increases and expansionary fiscal policy under Trump, the bank says.