Gold prices have slipped below the psychologically significant $4,000 per ounce threshold for the first time since mid-October, opening at $3,999.90 on October 28, 2025, after closing the previous session at $4,001.90.
Spot gold traded as low as $3,963.53 during the session, marking a sharp correction from its all-time high of $4,381.58 reached earlier in the month. This downturn reflects a rapid shift in investor sentiment driven by de-escalating geopolitical risks and profit-taking after a blistering rally.
US-China Trade Breakthrough Eases Safe-Haven Demand
Progress in US-China trade negotiations has fundamentally altered the market landscape. Negotiators announced a framework deal pausing American tariffs on Chinese goods in exchange for lifted restrictions on rare earth minerals critical to US industries. President Trump is set to meet President Xi Jinping on October 30 to finalize terms, fueling optimism that broader trade tensions will subside. This development has prompted investors to rotate out of gold into riskier assets like equities, which hit fresh records amid the positive news. The unwinding of trade war fears, which propelled gold's surge from $3,800 to over $4,400 in early October, has triggered technical selling and a stronger US dollar.
Federal Reserve Rate Decision Looms as Key Catalyst
Markets remain laser-focused on the Federal Reserve's two-day meeting concluding October 29, where a 25-basis-point rate cut to 3.75-4.00% carries 97.8% probability. While lower rates typically bolster non-yielding gold by reducing opportunity costs, the anticipated move is fully priced in, limiting upside surprises. Investors await Chair Powell's commentary on the pace of future easing amid lingering inflation above the 2% target and government shutdown disruptions. Softer-than-expected September CPI data has solidified expectations for continued cuts into December.
Year-to-Date Strength Persists Despite Weekly Correction
Despite the plunge, gold remains up over 50% year-to-date, supported by central bank purchases, geopolitical undercurrents, and structural demand from AI infrastructure and renewables. The People's Bank of China paused its buying spree in September, contributing to short-term pressure, but long-term physical demand from jewelry and technology sectors endures. Silver mirrored the decline, falling to $46.725 per ounce while staying 60% higher on the year.
Analyst Forecasts Signal Healthy Pullback, Bullish Horizon
Major institutions view the drop as a technical correction rather than a trend reversal. JPMorgan anticipates a rebound, with consensus year-end targets around $3,900 and mid-2026 projections exceeding $4,000. Citi trimmed near-term forecasts to $3,800, citing momentum shifts and potential shutdown resolution, but maintains a constructive medium-term outlook. Key support levels cluster at $3,950 and $3,822, with resistance at $4,020.
Implications for Investors in a Volatile Landscape
This pullback offers entry opportunities for long-term holders betting on persistent uncertainties, including fiscal challenges and election aftermaths. Short-term traders eye volatility around the Fed announcement, with downside risks tied to hawkish surprises or accelerated trade resolutions. Gold's role as an inflation hedge and portfolio diversifier endures, even as tactical positioning favors equities in the near term. The metal's trajectory hinges on tomorrow's policy signals and the Trump-Xi summit outcome.