Gold prices: The international gold prices extended their fall on Wednesday, after recording their worst single-day selloff a day prior in over five years. Gold fell more than 5% on Tuesday in its steepest fall since August 2020, as per a Reuters report.
Spot gold was down 0.4% at $4,109.19 per ounce today, down over 6% its fall from all-time high $4,381.21 touched on Monday.
The domestic gold market was shut on account of a holiday for Diwali in the last session. However, a sharp selloff cannot be ruled out when the bullion opens for trading in the evening session today. MCX is closed in the morning trade on account of Diwali Balipratipada.
What’s behind gold price fall?
From their record peak of ₹132,294 per 10 grams, gold prices have moderated to ₹128,000 in the domestic market, down by over ₹4,000 or 3%.
The latest selloff in gold prices follows profit-taking by investors amid a record run in the bullion market. Gold prices have offered nearly 60% returns this year, outperforming most major asset classes.
Additionally, signs of a thaw in US-China trade relations and a possible positive outcome in trade talks between India and the US have also bolstered the risk-off sentiment, pushing gold prices lower.
US President Donald Trump said he expected to reach a fair trade deal with Chinese President Xi Jinping when the two meet next week in South Korea. Moreover, Mint earlier today reported that New Delhi and Washington are nearing a long-stalled trade agreement that would reduce US tariffs on Indian imports to 15% to 16% from 50%.
Investors now look forward to the release of the September US consumer price index report as it could shed light on the Federal Reserve‘s interest rate outlook.
Ross Maxwell, Global Strategy Lead at VT Markets, said the gold price rally, fueled by a weaker US dollar, expectations of lower Fed rates, strong central bank buying and heightened geopolitical risks, is facing profit booking following the record run.
However, sustaining the rally could prove challenging, especially near the key $4,000–$4,400/oz psychological zone, though the broader bullish drivers remain intact, Maxwell said.
Gold price crash: Pause or trend reversal?
Echoing similar views on gold’s bullish outlook, Harshal Dasani, Business Head at INVAsset PMS, said that we are living through the third supercycle for precious metals.
“History has witnessed only two true supercycles in precious metals. The first began in the 1970s, when President Richard Nixon unpegged the dollar from gold, dismantling the Bretton Woods system and triggering a decade of double-digit inflation and a near-20x surge in gold. The second unfolded from 2000 to 2010, as quantitative easing and the European debt crisis eroded faith in fiat currencies. Now, between 2020 and 2025, we are living through the third,” said Dasani.
What makes this cycle more potent is the scale of leverage in paper markets, he explained.
For every ounce of physical gold, there are nearly 150 paper claims, and for silver, over 350. COMEX short positions are sitting on a powder keg, while physical inventories at LBMA and Shanghai continue to deplete. That’s why every correction in gold or silver is being met with aggressive buying — the market senses a potential squeeze unlike anything seen before, Dasani said.
He believes that this current dip makes it an opportunity to buy.
Commenting on a more immediate outlook for gold, Maxwell said that if the Federal Reserve’s upcoming commentary signals deeper rate cuts or geopolitical risks intensify, gold could regain upward momentum.
However, a stronger USD or a rise in real yields may lead to short-term corrections of around 5–10%, he cautioned.
“Investors should adopt a disciplined approach, gradually entering positions through dollar-cost averaging, diversifying across instruments, and tracking key triggers like US inflation data and Federal Reserve guidance. Gold continues to be a compelling hedge and portfolio diversifier, but prudent risk management and awareness of volatility are essential to navigate the current market phase,” Maxwell added.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
