- Gold futures plummet amid easing geopolitics and profit-taking.
- Future traders are eyeing the upcoming FOMC meeting for directional bias.
- Gold’s structural demand could find dip-buying interest with long-term bullish targets.
Gold futures plummeted on Tuesday, slipping well below the key $4,000 mark as investors scaled back positions after several weeks of intense rallying. The retreat came after the yellow metal hit a fresh all-time high near the $4,400 area on 20th October, a 7-week climb of around 27%. The gold futures lost traction as global sentiment improved, pushing investors to book profits.
Market participants call this correction a reaction to the parabolic rise in gold price over the past few months and softening geopolitical risk premiums. The recent US-China trade negotiations showed a positive outcome as President Trump signed new framework deals with Cambodia, Japan, Malaysia, Thailand, and Vietnam on rare minerals and trade cooperation. The move signals improved economic stability and reduced uncertainty in the Asia-Pacific region.
Precious metals’ downturn comes ahead of the key Federal Reserve meeting to reduce the rates by 25 bps. Gold prices tend to benefit from lower interest rates. However, the recent gold volatility shows traders may already have priced in dovish expectations. The gold futures briefly broke the $3,900 mark, adjusting to a more balanced outlook.
The London Bullion Market Association’s annual conference in Kyoto described the gold’s downturn as a healthy correction after an unsustainable surge. World Gold Council’s John Reade noted that many traders welcomed the recent drop, believing the speculative froth would be cleared and equilibrium would be restored. Capital Economics analysts echoed the sentiment, cutting their forecast to $3,500 in 2026 due to overstretched valuation.
The domestic markets also mirror the gold price decline, reporting a sharp reduction in jewelry prices and 24k gold bars. The investor enthusiasm cooled down after a period of unprecedented gains.
Still, the long-term optimism stays intact. Major banks like Bank of America, HSBC, and Societe Generale continue projecting the target of $5,000 in 2026, driven by central bank diversification and structural demand to hedge against debt and dollar weakness. The gold futures are poised to consolidate losses and digest profit-taking.