Gold prices experienced a sharp correction following a prolonged rally that pushed them to an all-time high. In just one day, the precious metal recorded its steepest drop in more than a decade, signaling the end of a rapid upward phase that had continued since early October.
Spot gold plunged as much as 6.3% on Tuesday (Oct 21), touching US$4,082 per troy ounce before stabilizing around US$4,141 on Wednesday morning. Meanwhile, U.S. gold futures fell 5.7% to US$4,087.70, marking the largest single-day decline since 2013. Silver and platinum also weakened, falling about 7% and 5%, respectively.
Factors Behind the Gold Price Correction
The correction was mainly driven by profit-taking after an aggressive rally, as well as a stronger U.S. dollar, which made gold more expensive for buyers holding other currencies. Additionally, improving global risk sentiment—following signs of easing trade tensions between the United States and China—reduced demand for safe-haven assets such as gold.
Seasonal factors also played a role, including the end of India’s Diwali festival, a period that traditionally boosts physical gold demand. As demand subsided, selling pressure increased across global markets.
Gold Remains One of the Year’s Top-Performing Assets
Despite the sharp decline, gold is still up more than 50% year-to-date in 2025, making it one of the best-performing assets this year. The strong rally over the past two months has also lifted the value of gold-focused investment funds and mining stocks to multi-year highs.
Data from FE fundinfo shows that several funds, including Schroder ISF Global Gold Fund, L&G Gold Mining UCITS ETF, and Ninety One Global Gold, have tripled in value since 2022.
The current price correction is viewed as part of a natural consolidation process following a rapid rally. As long as factors such as global inflation, central bank gold purchases, and ongoing economic uncertainty persist, gold is likely to remain attractive to long-term investors.
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