Gold fell 5.32% on the global commodity market on October 21, 2025, marking its sharpest single-day decline since 2020 and dipping below $4,200 per ounce.
The drop followed a strong rally that began in September and intensified through early October, driving the metal past the $4,000 mark to a record high of $4,355 per ounce on October 20.
By the next trading day, the rally had run out of steam as gold lost more than 5% to close at $4,123.
According to Nicky Shiels, Head of Metals Strategy at MKS PAMP, the decline was driven by “extremely overbought conditions,” describing it as a natural correction after weeks of strong gains.
UBS analysts had earlier projected that gold could reach $4,500 by 2026, revising their forecast upward after the metal climbed to $3,900 per ounce and met their earlier target.
In their report titled “In Gold We Trust,” the firm linked gold’s rise to ongoing geopolitical tensions between the United States and China and to expectations that possible U.S. rate cuts could weaken the dollar, pushing investors toward gold as a safe haven.
However, with U.S. President Donald Trump signaling plans to visit China early next year at Beijing’s invitation, some analysts are now questioning whether gold’s rally can hold if tensions between the two countries begin to ease.
U.S. President Donald Trump said on Monday, October 19, 2025, that he expects to reach a “fair trade deal” with Chinese President Xi Jinping.
“I’ve been invited to go to China, and I’ll be doing that fairly early next year,” Trump told reporters at the White House. “I think we’re going to have a fantastic deal with China — one that’s great for both countries and for the world.”
Asked about China’s leverage, Trump said Beijing “threatened us with rare earths, and I threatened them with tariffs,” but added that his strong relationship with Xi would help both sides reach “a very fair deal.”
Markets are closely watching the possible Trump–Xi meeting, as failure to agree could strain ties between the two powers and unsettle the global economy.
After his remarks, the U.S. dollar index (DXY) rose 0.38% on Tuesday, while gold, already in overbought territory, fell more than 5%.