After months of skyrocketing, gold and silver prices took a sharp fall. Gold fell 2.9% on October 22, and silver fell 2% on October 21. The uptrend will likely continue, say the analysts, as several investors rushed to buy gold during this dip period. According to The Economic Times, the gold prices have more than doubled, it’s 60.1% in 2025 in India. So, despite such a strong start, what caused this fall? Will this happen again? Should gold investors be worried about it? And what else is going on in the markets? For all that, learn more.
What’s Happening With Gold and Silver?
- Notably, gold prices on Wednesday fell by 2.9% to $4,004.26 per ounce. The price fell 6.3% on Tuesday already; it’s in fact the biggest dip in 12 years.
- On the other hand, the silver prices fell by 2% which is $47.6 per ounce. Silver suffered a 7.1% fall in the previous session as well.
Why Are They Falling?
- The primary reason is that the traders are taking profits. It means that the investors (gold and silver) are selling the gold when the prices are high (as they were a few days ago).
- Since gold prices went up massively, it’s common for investors to think that it will become a “bubble” (unsustainably high).
- So, the rally might have begun with a few, and then others followed, triggering a chain reaction of selling.
What Else Is Going on in Markets
- Asian stock markets are mixed at the moment, with some rising and others falling. Overall, there was a weak performance on Wall Street.
- U.S. stocks were flat on October 21, and the S&P 500 barely saw a moment.
- U.S. government bonds (Treasuries) were high as investors became cautious, and it’s a usual occurrence. Plus, the U.S. dollar was stable.
Why Gold Rose So Much Earlier
The gold skyrocketed in price like never before. Reasons were:
- Central banks across the world have made significant investments in gold.
- There are several concerns about U.S. government debt and deficits (meaning the “fiscal health” of the U.S.).
- Lower bond yields made gold more attractive because it doesn’t pay interest.
Stock Market vs. Precious Metals
- The dip in gold and silver (essentially a crash) had little impact on the stock market, as it performed steadily for the most part.
- According to Barclays, the big funds are mostly in stocks only, so the risk is minimal.
- Famous analysts like Craig Johnson from Piper Sandler affirmed that this pullback is normal and healthy.
The U.S. Government Shutdown Factor
Due to the U.S. government shutdown at the moment, it’s hard to source out critical economic data, like the weekly Commodity Futures Trading Commission (CFTC) report. Now, this data can help us understand how much hedge funds and big players invested in gold and silver, and how much it affected them.
Furthermore, analysts from ANZ Bank suggest that gold prices have strong long-term support.
Sakshi Jadhav
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