Spot gold fell 0.4% to $4,109.19 an ounce, following Tuesday’s steep 5% decline, the sharpest one-day drop since August 2020. The reversal came after US President Donald Trump expressed optimism about striking a “fair” trade deal with Chinese President Xi Jinping during their meeting next week in South Korea, boosting some of the geopolitical jitters that had fueled the bullion’s rise were eased.
Even after the sell-off, gold remains one of this year’s standout assets, up about 56% so far in 2025. The metal hit a record high of $4,381.21 an ounce on Monday, driven by ruthless central bank buying, global uncertainty and expectations of further U.S. interest rate cuts.
Investors are now turning their attention to Friday’s U.S. Consumer Price Index, postponed due to the government shutdown, to provide further guidance on the Federal Reserve’s policy path. Economists in a Reuters poll expect the Fed to make a 25 basis point cut next week, followed by another cut in December, although opinions remain divided on how low rates could go in 2026.
The correction in gold reflected a sharp sell-off in silver, which fell nearly 7.5% to around $47.12 an ounce on Tuesday. The drop, one of the biggest single-day declines in recent years, reflected broad profit-taking in precious and industrial metals amid a stronger U.S. dollar, which typically dampens demand for dollar-priced commodities.
What’s next?
The yellow metal is expected to open weak in the domestic market on Wednesday, following a 5.5% decline in international spot prices, the steepest since August 2020.
“Prices are likely to correct to Rs 1.22-Rs 1.23 lakh per 10 grams on Wednesday when the Indian gold market opens. If prices remain at this level, the revival in demand that we had witnessed during Dhanteras will continue. It is good for the consumers who have weddings in their families as a price correction means less pressure on pockets,” said Surendra Mehta, National Secretary of the India Bullion & Jewelers Association. (IBJA), told The Economic Times. “Festive demand in India continues to bolster prices, although post-festive profit booking may emerge as traders hold on to gains. The focus this week will remain on the US CPI and Core CPI data, which could guide market expectations of the Fed’s next rate move. The prolonged US government shutdown has also kept a premium built into gold prices, maintaining the safe-haven appeal. The Trading Margin is expected between Rs. 1,25,000 and Rs 1,30,000,” said Jateen Trivedi of LKP Securities.
The Indian Multi-Commodity Exchange (MCX) will remain closed during the morning session on Wednesday, October 22, 2025, on account of Diwali Balipratipada. Trading will resume during the evening session from 5:00 PM to 11:30 PM.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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