PRECIOUS-Gold retreats after record rally, on track for biggest daily drop since 2020

By Noel John and Sherin Elizabeth Varghese

Oct 21 (Reuters) - Gold prices were on track for their steepest daily fall in five years on Tuesday, as investors booked profits after expectations of U.S. interest rate cuts and sustained safe-haven demand drove the yellow metal to a record high in the previous session.

Spot gold XAU= was down 4.9% to a one-week low of $4,143 per ounce as of 11:49 a.m. EDT (1549 GMT), its steepest fall since August 2020.

U.S. gold futures GCcv1 for December delivery fell 4.7% to $4,155 per ounce.

Prices scaled an all-time peak of $4,381.21 on Monday and have gained about 60% this year, bolstered by geopolitical and economic uncertainty, rate-cut bets and sustained central bank buying.

"Gold dips were being bought as recently as yesterday, but the sharp jump in volatility at the highs over the past week is flashing caution and may encourage at least short-term profit-taking," said Tai Wong, an independent metals trader.

The dollar index .DXY rose 0.4%, making bullion more expensive for holders of other currencies. USD/

"Better risk appetite in the general marketplace early this week is bearish for the safe-haven metals," Jim Wyckoff, senior analyst at Kitco Metals, said in a note.

Analysts at Citi said in a note they expect an end to the ongoing U.S. government shutdown, as well as U.S.-China trade deal announcements, could contribute to gold prices consolidating over the next two to three weeks.

Spot silver XAG= dropped 6.8% to $48.89 per ounce.

"Silver is stumbling badly today and has dragged the entire complex lower," Wong said.

"It appears we have a short-term top at $54 and while sentiment wobbles under $50, silver is likely to trade sideways with substantial volatility as long as gold remains relatively firm."

Elsewhere, platinum XPT= shed 5.4% to $1,550.10 and palladium XPD= lost 5.1% to $1,425.19.

Gold, a non-yielding asset, tends to benefit in a low interest rate environment.