The risk-on trade accelerated in mid-day trading Tuesday, as U.S. equity markets surged higher and safe havens such as gold and the U.S. dollar declined.
The Dow Jones Industrial Average (DJIA) climbed as much as 219.28 points, or 2.0%, to 11,074.63, fueled by gains in financials and cyclicals. The CBOE Volatility Index (VIX), a key measure of risk aversion, tumbled 8.8% to 38.72.
While the broader markets posted substantial gains, gold futures tumbled. COMEX gold for December 2011 delivery fell nearly $30 to $1,863 per ounce, after earlier reaching a new all-time record high of $1,917.90 in overnight trading.
Gold shares were the only sector of the equity markets lower, as the AMEX Gold Bugs Index (HUI) dropped 2.5% to 590.18.
The U.S. Dollar Index (DXY) retreated 0.4% to 73.856 against a basket of foreign currencies in mid-day trading, while the euro advanced 0.5% to 1.4429 against the greenback.