Gold price dips below $4,000, silver price drops from $50 levels as investors lock in gains

Gold slipped back below $4,000 an ounce and silver retreated from its highest level since 1980 as US equities weakened and investors locked in profits.

Silver prices often moves in tandem with gold's, sharing its strong negative correlation with the US dollar and Fed interest rates, but the metal is also notoriously volatile. (Unsplash)

Spot gold price fell 1.6% to 3,976.65 as of 4:32 pm in New York, while spot silver price was 0.8% higher at $49.29 an ounce.

The bullion market slipped after a torrid rally this week left gold and silver prices vulnerable to pullbacks on concerns that the metal is trading at overheated levels.

Technical indicators show gold has been trading in overbought territory for the past month, likely leading to some profit-taking by investors following a scorching four-day run. Platinum and palladium also fell.

Gold’s selloff coincided with Thursday’s weakness in US equities. While gold is traditionally viewed as a hedge against riskier assets like stocks, it often falls during broad market selloffs as investors sell their holdings to cover losses in other markets.

Meanwhile, silver price retreated after touching $51.24 an ounce earlier Thursday—the highest in more than four decades. Silver’s surge lifted prices by more than 70% this year, outperforming gold’s year-to-date performance.

The rally among the two key precious metals is part of a growing search for haven assets sparked by fears of fiscal risks in the US, an overheating equities market and threats to the US Federal Reserve’s independence.

Silver prices often moves in tandem with gold's, sharing its strong negative correlation with the US dollar and Fed interest rates. But the metal is also notoriously volatile, and has a cult following among retail investors who view silver prices as being suppressed by large banks and institutions.