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The declines also came as investors weighed potential progress in talks between the US and China, following a recent resurgence in tensions that had bolstered demand for haven assets. Trump on Tuesday predicted an upcoming meeting with Chinese President Xi Jinping would yield a “good deal” on trade — while also conceding the talks may not happen.

The US government shutdown has also meant traders have been left without one of their most valuable tools: a weekly report from the Commodity Futures Trading Commission that indicates how hedge funds and other money managers are positioned in US gold and silver futures. Without the data, speculators may be more likely to build abnormally large positions one way or another.

On a technical basis, the move in gold is a correction for now — albeit “a huge one,” said Nick Twidale, chief market analyst at AT Global Markets in Sydney.

“My simple explanation is — the market has been driven by huge reallocation flows and there was some big players taking profit, and that would have triggered stops on the way down,” he said. “If it breaks cleanly through $4,000, we could see an even bigger capitulation.”

Volatility in precious metals has surged in recent sessions, with traders seeking to hedge against potential price drops in other parts of their portfolios, or profit from the decline. A record amount of options contracts linked to the world’s largest gold-backed exchange traded fund were traded on both Thursday and Friday of last week.

The setback in gold is so far “not massively contagious,”said Anna Wu, a cross-asset strategist at Van Eck Associates Corp. in Sydney. “Gold, despite its strong run recently, still shoulders an important haven role. Central banks have not stopped buying, nor private capital.”

Silver’s recent moves have been even more dramatic than gold, with a historic squeeze in the London market last week driving prices beyond the record set in 1980. Benchmark prices traded above New York futures, prompting traders to ship metal to the UK capital to ease tightness. On Tuesday, silver in vaults linked to the Shanghai Futures Exchange saw the biggest one-day outflow of silver since February, while New York stockpiles have also fallen.

Spot gold rose 0.3% to $4,138.87 an ounce as of 11:45 a.m. in Singapore, after falling as much as 2.9% earlier in the session. Silver rebounded from a loss of as much as 2.4% to trade 0.5% higher at $48.9539 Platinum declined, after tumbling more than 5% on Tuesday, while palladium advanced 1%. The Bloomberg Dollar Spot Index dipped 0.1%.

–With assistance from Yvonne Yue Li, Matthew Burgess and Rob Verdonck.

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