The record-breaking ascent of gold has finally hit a pause button. After a stunning nine-week rally that propelled prices to all-time highs, the precious metal experienced its most significant weekly decline since May, leaving the market to ponder: is this a healthy correction or the start of a deeper downturn?
As of Friday, 24 October 2025, spot gold traded around $4,112 per ounce, shedding nearly 3% over the week. The sharp reversal has prompted a swift reassessment of the drivers that fueled gold’s meteoric rise and the new factors now applying the brakes.
The Triple Whammy: Profit-Taking, a Mighty Dollar, and Data Jitters
Analysts point to a confluence of three immediate pressures behind the sell-off:
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Profit-Taking: After such a prolonged and steep rally, a wave of profit-taking was almost inevitable. Traders, seeing valuations at record levels, chose to lock in gains, creating a natural downward pull on the price.
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US Dollar Resurgence: The U.S. dollar index, which had been subdued, rallied for three consecutive sessions. A stronger dollar makes dollar-denominated gold more expensive for holders of other currencies, dampening international demand. For real-time analysis on dollar strength, you can follow insights from Reuters Markets.
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Inflation Data Anxiety: The market was in a holding pattern ahead of the critical U.S. Consumer Price Index (CPI) release. This key inflation report holds the power to shape the Federal Reserve’s interest rate policy, creating uncertainty that often leads to volatile, cautious trading.
Behind the Scenes: ETF Exodus and Technical Breakdown
Beyond the obvious headlines, technical factors exacerbated the decline. Data from Trading Economics confirmed a massive single-day outflow from gold-backed exchange-traded funds (ETFs), the largest in five months. This exodus represents a withdrawal of institutional investment, adding significant technical selling pressure.
Furthermore, the market witnessed its most considerable intraday drop in five years earlier in the week, with prices falling over 5% in a single session. This signaled that the market, after being in an overbought state for weeks, was ripe for a sharp correction.
Geopolitical Winds Shift: Calmer Waters Reduce Safe-Haven Demand
Gold’s role as a premier safe-haven asset means its fate is often tied to global uncertainty. Recently, two geopolitical developments have contributed to a calmer landscape:
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US-China Trade Thaw: Reports from credible sources like Bloomberg indicated that the U.S. and China are nearing a preliminary trade agreement, reducing a major source of global economic anxiety.
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Contained Fallout from Sanctions: While new U.S. sanctions were imposed on Russia, the market reaction was notably muted. This suggested that investors do not see an immediate escalation, further reducing the urgency to hold gold as a hedge.
The Long-Term Outlook: Is the Bull Market Still Intact?
Despite the recent stumble, the foundational case for gold remains robust for many experts. Banking giant JPMorgan maintains a strikingly bullish long-term forecast, predicting gold could average an astonishing $5,000 per ounce by 2026. Their rationale hinges on persistent inflationary pressures and unwavering demand from global central banks, which have been steadily adding gold to their reserves.
So, is this the end of the golden run? Most analysts interpret the plunge as a necessary and expected correction within a longer-term bull market. The fundamental drivers—inflation, central bank buying, and unresolved geopolitical risks—have not vanished.
As the market absorbs incoming economic data and deciphers the Fed’s next move, short-term volatility is almost a given. The historic nine-week winning streak may be over, but the final chapter for gold’s 2025 rally is far from written
