• Spot gold whipsawed on Wednesday, tumbling as much as 2.6% below $1,900 per ounce before erasing losses and gaining as much as 2% through the morning.
  • The volatile session comes after gold sank the most in seven years on Tuesday.
  • Rising Treasury yields "delivered a sledgehammer blow to precious metal markets" in yesterday's session, Craig Erlam, senior market analyst at OANDA Europe, said.
  • Growing interest in gold among retail investors could provide key support and boost prices back above $2,000 per ounce, Ole Hansen, head of commodity strategy at Saxo Bank, said.
  • Watch gold trade live here.

Gold sank below a key threshold and promptly retraced losses in volatile Wednesday trading following the previous session's extraordinary decline.

Spot gold tumbled as much as 2.6% to $1,863.15 per ounce on Wednesday, breaking below $1,900 for the first time since late July. The metal then rebounded and gained as much as 2%, to $1,949.40 per ounce.

Futures for December delivery fared similarly. Contracts slid to $1,871.60 before rising through the morning to an intraday high of $1,956.40.

Silver also gained in Wednesday trading, leaping as much as 6% to $26.29.

Gold has enjoyed stronger-than-usual volatility in recent weeks as investors shift cash from risk assets to safe havens. Spot gold surged past $2,000 per ounce to record highs last week as Treasury yields and the US dollar weakened.

Prices then tumbled the most in seven years on Tuesday as analysts warned the rally was overextended and investors secured profits.

Cboe's GVZ index, a popular gauge of gold exchange-traded fund volatility, has nearly doubled over the past month. The index closed 15% higher on Tuesday alone amid the sharp sell-off.

Rising Treasury yields on Tuesday "delivered a sledgehammer blow to precious metal markets," Craig Erlam, senior market analyst at OANDA Europe, said in a note. Technical support emerged at $1,860 per ounce, he added, which likely buoyed prices before investors returned to the popular hedge bet.

Where analysts had been warning of gold turning overbought, some now view Tuesday's plunge as too steep. The metal is increasingly garnering interest from retail investors after having been mostly owned by central banks and investment funds, Ole Hansen, head of commodity strategy at Saxo Bank, said. That new popularity could drive gold back to fresh records, he added.

Spot gold traded at $1,936.23 per ounce late on Wednesday, up 26% year-to-date.

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