Gold prices fell more than 2% in volatile trading on Monday as investors liquidated positions in tandem with a broader equities selloff, though analysts said bullion’s safe-haven appeal remains strong as U.S. recession fears mount.

Spot gold was down 2% at $2,393.66 an ounce by 1139 GMT. U.S. gold futures lost 1.4% to $2,434.10.

“There’s some truth in the old chestnut that all correlations go to one in a crash, and with traders needing to liquidate winning positions to cover margin calls on other assets, gold’s volatility signals the level of panic hitting equity markets,” said Adrian Ash, director of research at Bullionvault.

Stock markets tumbled, with Japanese shares exceeding their 1987 Black Monday loss at one point, as fears of a U.S. recession prompted investors to offload risk assets.

Asia gold: India premium drops as buying moderates; China demand lags

Data on Friday showed that the U.S. unemployment rate jumped to 4.3% in July, raising the likelihood of a Federal Reserve cut to interest rates in September, with markets now expecting the central bank to cut by as much as 50 basis points.

“Elevated geopolitical tensions and recent hopes for even greater Fed rate cuts should create supportive conditions for bullion. Ultimately, gold should be able to post a new record high once nerves settle,” said Han Tan, chief market analyst at Exinity Group.

Bullion, often used as a hedge against geopolitical and economic risks, thrives when interest rates are low.

Prices of other precious metals also slumped as recession worries dampened the demand outlook.

Spot silver was down 5.7% at $26.92 while platinum fell 4.1% to $918.35 and palladium lost 4.5% to $849.05 after hitting its lowest since August 2018.

Platinum and palladium, both used in engine exhausts to reduce emissions, have come under pressure from the long-term risk presented by the transition to net zero emissions.

However, there are massive short positions that will eventually be unwound, so there is a good chance that both will reach around $1,000, said StoneX analyst Rhona O’Connell.