• Gold prices, after hitting a record $4,381.21 in October 2025, plummeted over 6% on October 21, dropping below $4,000, but rebounded slightly to $4,014 yesterday
• A U.S.-China trade framework agreement sparked the sell-off, reducing gold’s safe-haven appeal
• Analysts project a tactical pause with prices potentially testing $3,900-$4,000 support, but long-term forecasts see gold averaging $4,275 in 2026, driven by inflation and geopolitical hedging

Harare- Gold’s 2025 journey has been a rollercoaster, soaring to unprecedented heights before a dramatic plunge that has left investors questioning its next move. As of October 28, 2025, spot gold prices edged up to $4,014 per ounce, a modest 0.82% rebound from the prior session but still nursing wounds from a more than two-week low. The metal suffered a historic 6% drop on October 21, shedding nearly $300 in a single day, the steepest decline since 2013, falling below the psychological $4,000 mark after hitting a record $4,381.21 earlier in the month.

This volatility capped a remarkable year-to-date rally of over 57%, driven by geopolitical unrest, persistent inflation fears, and aggressive central bank buying. The sharp correction has sparked debate: Is this a healthy breather in a robust bull market, or a signal of deeper challenges on the horizon?

The trigger for the recent sell-off echoes a pivotal moment from 2019, when gold prices fell 3-4% after a U.S.-China trade truce eased global tensions. In 2025, a parallel unfolded as U.S. and Chinese negotiators announced a “substantial framework” agreement in Malaysia over the weekend, addressing tariffs, fentanyl controls, export restrictions, and shipping fees.

This deal, averting a threatened 157% tariff hike on Chinese goods and paving the way for a Trump-Xi summit in South Korea, ignited a risk-on wave that eroded gold’s safe-haven appeal. Investors rushed to secure profits from gold’s overheated rally, with High Ridge Futures noting that record options volumes on gold ETFs and aggressive upside momentum amplified the crash.

Yet, history suggests such dips are often short-lived; post-2019, gold rebounded 18% by mid-2020, hinting at resilience in its long-term bull run.

Gold’s 2025 surge, marked by its 45th all-time high and a historic breach of $4,000, draws parallels to the inflationary spikes of the 1970s. A weakening U.S. dollar, strained by fiscal deficits and policy gridlock, has bolstered gold’s allure as a non-yielding asset. The Federal Reserve’s shift to monetary easing, with markets anticipating a 25-basis-point rate cut this week following September’s 3.0% CPI rise, further supports gold by lowering the opportunity cost of holding it.

Billionaire Ray Dalio’s warnings of “stagflation anxiety” and waning Fed independence add to the bullish case, as do geopolitical tensions in the Middle East, U.S. government shutdown risks, and de-dollarization efforts by emerging markets.

Central banks have been voracious, accumulating 64-80 tonnes of gold monthly, well above pre-2022 levels, while physically backed ETFs have absorbed 634 tonnes year-to-date, nearing 2020 peaks. Retail demand in India, though softened by high prices post-Diwali, remains a steady force.

Despite these tailwinds, headwinds are emerging. The U.S.-China framework has lifted risk assets, potentially strengthening the dollar and equities at gold’s expense. Profit-taking intensified after technical indicators, like an overbought relative strength index, flashed warnings before the crash.

Seasonal lulls in physical demand and market rotations into equities could further cap near-term gains. However, structural demand remains strong, with central banks diversifying away from 43% exposure to U.S. assets and ETF inflows hitting $33 billion in just eight weeks. The interplay of monetary easing and geopolitical hedging against trade optimism and technical corrections will shape gold’s path forward.

Looking ahead, analysts see a tactical pause rather than a trend reversal. A Reuters poll of 39 analysts projects an average price of $3,400 in 2025, climbing to $4,275 in 2026, a historic first above $4,000 annually. JP Morgan forecasts $5,055 by Q4 2026, driven by 566 tonnes of quarterly demand, while Bank of America eyes $5,000 as early as 2026, citing “debasement hedging.”

More conservative estimates from Goldman Sachs predict a 6% rise to $4,000 by mid-2026, with Morgan Stanley targeting $4,400. Near-term, prices may test $3,900-$4,000 support, depending on Fed signals and the Trump-Xi summit outcome.

A finalised deal could deepen the correction by 5-7%, but robust central bank buying and macro risks should limit downside. CoinCodex projects year-end averages near $4,848, with potential spikes to $5,110 if inflation or geopolitics reignite.

For investors, this dip presents a strategic entry point, with 5-10% portfolio allocations recommended, while traders should monitor policy shifts for tactical opportunities. As David Russell of GoldCore notes, gold’s rally reflects “a new reality” of eroding trust in fiat systems, suggesting that while 2025 may end with a retreat, gold’s long-term ascent remains firmly intact.

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