Gold Prices Plunge Over 5% After Hitting Record High

NEW YORK, NY — Gold prices dropped more than 5% on Tuesday, October 21, 2025, falling to around $4,130 per ounce. This marks the largest one-day decline since August 2020, following a record high of $4,382 on Monday.

The sharp decline was attributed to profit-taking by investors and a strengthening US dollar. Safe-haven demand for gold diminished as global economic sentiment improved, particularly with anticipation around US–China trade negotiations. Presidents Donald Trump and Xi Jinping are set to meet next week to discuss tariff issues and avoid further escalation of trade tensions.

The end of the seasonal gold-buying spree in India also negatively affected physical demand. Market experts expect the US government shutdown to be resolved, and they are eagerly awaiting delayed inflation data scheduled for release on Friday.

Investors are pricing in a potential 25-basis-point cut in the Federal Reserve’s interest rates next week, with an additional cut likely in December. Despite the recent pullback, gold is still up more than 60% year-to-date, driven by expectations of continued Fed easing and a lingering appetite for safe-haven assets.

Chris Beauchamp, chief market analyst at IG, commented, ‘the mania appears to have popped for the time being.’ He noted that there may be opportunities for a ‘buy the dip’ scenario in precious metals.

Other precious metals were not spared from the downturn; silver prices fell 8.4% during the same session. Analysts caution that the current volatility could trigger more short-term profit-taking, demonstrating how interconnected global markets have become.

As the Friday inflation report approaches, market participants remain watchful. The path forward for gold and other precious metals will hinge on investor sentiment and macroeconomic developments in the coming months.