After repeatedly reaching new highs, the prices of precious metals have fallen sharply
According to the Commodity Market Analysis System of Shengyi Society, as of October 28, 2025, the gold spot market price was 908.26 yuan/gram, an increase of 4.15% from the gold spot market price of 872.11 yuan/gram at the beginning of this month (October 1), and a decrease of 7.90% from the gold spot market price of 986.21 yuan/gram on October 21; During the month, the price of gold first rose and then fell, repeatedly reaching new highs in the early stages, but began to decline from high levels in the later stages. Currently, the overall price is still at a historical absolute high.
According to the Commodity Market Analysis System of Shengyi Society, the average price of silver in the market on October 28, 2025 was 11168.67 yuan/kg, an increase of 2.56% compared to the average price of 10890.33 yuan/kg at the beginning of this month (October 1), and a decrease of 5.50% compared to the average price of 11891 yuan/kg on October 21.
Overview of precious metal and crude oil price trends
Since 2025, the price correlation between precious metals and Brent crude oil has shifted from a short-term weak positive correlation to a long-term significant negative correlation.
Comparison of precious metal gold and silver price trends in the past year
From the past year’s cycle, gold and silver have consistently maintained a strong positive correlation. The overall fluctuation of gold and silver prices shows a synchronous trend, and their ups and downs are basically synchronized during most of the time. For example, during the upward phase from late October 2024 to April 2025, as well as subsequent fluctuations and further upward movements, the trend directions of the two are basically consistent.
Reasons for the recent price correction
The recent decline in gold prices is the result of multiple factors such as geopolitical easing, strengthening of the US dollar, technical correction, changes in Federal Reserve policy expectations, and seasonal decline in physical demand.
1、 Geopolitical risks ease, leading to a sharp drop in safe haven demand
The geopolitical tensions that previously supported the rise in gold prices have significantly eased. In terms of the Russia-Ukraine conflict, Ukrainian President Zelensky said that he was ready to end the conflict, and the two sides reached a statement on the current line of contact as the starting point for negotiations; The situation in the Middle East has also made positive progress, with Israel and Hamas achieving a breakthrough in ceasefire negotiations and reducing the risk of large-scale ground attacks. At the same time, the economic and trade relations between China and the United States have released signals of easing. The Trump administration has temporarily suspended its plan to impose 100% tariffs on China and plans to hold economic and trade talks at the end of October. These changes directly weakened the market’s safe haven demand for gold, causing funds to quickly withdraw from the gold market.
2、 The strengthening of the US dollar suppresses the price of gold
The US dollar index has continued to rebound recently, breaking through the 104 level on October 23 (a new high for the year). Gold is priced in US dollars, and the strengthening of the US dollar increases the cost for investors holding other currencies to purchase gold, suppressing demand for gold. Behind the strengthening of the US dollar is the strong performance of US economic data, the market’s optimistic expectations for the US economic outlook, and the uncertainty of the Federal Reserve’s monetary policy, which has also increased the attractiveness of the US dollar.
3、 Technical overbought triggers profit taking and selling
The previous increase in gold prices was too large. The London gold price broke through $4380/ounce on October 17th, reaching a historic high, with a cumulative increase of over 30% in the short term. Technical indicators were severely overbought (RSI remained above 70 for several consecutive days). This extreme upward trend has accumulated a large amount of profit taking, and when there are negative signals in the market, investors choose to take profits and trigger chain selling. In addition, the automatic sell order triggered by the programmatic trading system after the price falls below the key support level further amplifies the decline, forming a “kill more” situation.
4、 Changes in Federal Reserve policy expectations and rising opportunity costs
The market’s expectations for the pace of the Federal Reserve’s interest rate cuts are divided. Although most institutions expect a 25 basis point interest rate cut at the end of October meeting, recent statements by Federal Reserve officials have revealed a cautious attitude in a dovish tone, suggesting that the rate cut may not be a policy shift, but rather an “insurance measure”. This uncertainty has led to a decrease in the market’s probability of a cumulative 50 basis point rate cut in December from 94% to 87%, with real interest rates rising from -0.1% to 0.2%. The opportunity cost of holding gold has increased, suppressing bullish sentiment.
5、 Seasonal decline in physical demand
As an important global consumer of gold, India’s peak buying season for Diwali has ended, and the purchasing frenzy generated by holiday demand has receded, entering the traditional consumption off-season in the market. According to data from the World Gold Council, India’s gold imports in October decreased by about 35% month on month, falling from 120 tons in September to 78 tons. The seasonal demand contraction directly weakened the market’s carrying capacity. The domestic market is also showing a cooling trend in demand, with a net outflow of funds in the gold ETF market, reflecting the impact of price drops on retail investor sentiment.
Future forecast
The recent decline in precious metals is the result of a resonance of factors such as profit taking, geopolitical easing, liquidity pressure, and deteriorating position structure, and belongs to a stage adjustment after the previous rise.
In the future, the precious metal market will experience short-term fluctuations, medium-term differentiation, and long-term improvement. In the long run, factors such as the continuous purchase of gold by global central banks to promote reserve diversification and the long-term challenges faced by the US dollar credit system still provide long-term support for gold prices.
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