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Gold’s Record Run Stalls as Prices Slip Over 6%: Global Correction Reverberates in India
By Bajaj Broking Team
October 25, 2025
3 mins read
Market News
Synopsis:
After nine weeks of record-breaking gains, gold prices have plunged by more than 6%, marking their steepest decline in more than a decade. The global correction has quickly echoed in India, softening domestic bullion prices ahead of the festive season.
Source: Bloomberg, Reuters, and Economic Times
Disclaimer: This content has been published for informational purposes only. Bajaj Broking is not affiliated with, nor does it endorse or assume any responsibility for, the source material. Readers are advised to consult the original publication for complete and accurate context
After an unbroken nine-week rally that propelled bullion to record highs, gold prices have finally reversed course, marking one of the sharpest corrections in recent memory. According to Bloomberg, spot gold dropped to around ₹1.26 Lakhs per 10 grams for 24 Karat Gold by Friday, down from a lifetime high of ₹1.32 Lakhs touched just days earlier. The metal is on track for a weekly decline exceeding 3 per cent, its steepest since May, and has fallen as much as 6.3 per cent in intra-week trade — the most significant single-week loss in nearly 12 years.
The pull-back comes after an extraordinary stretch that saw gold surge about 60 per cent year-to-date, fuelled by central-bank purchases, retail accumulation, and what traders have termed the “debasement trade” — investors seeking refuge from widening fiscal deficits and weakening sovereign currencies.
A Nine-Week Rally That Turned Overheated
Gold’s surge since mid-August was one of the most rapid in recent decades. The rally, which began when the metal hovered near US$2,800 an ounce and, from an Indian context, the price on 15th August 2025, stood near the ₹1 Lakh Mark for 10 Grams (24K), accelerated through September and October as central banks expanded holdings and speculation over potential US Federal Reserve rate cuts lifted sentiment. By the third week of October, bullion had climbed more than ₹30K from its August levels and had touched the ₹1.3 Lakh Mark for 10 Grams (24K), hitting new all-time highs on multiple trading days.
However, technical indicators showed extreme overbought readings for most of September and early October. Bloomberg data highlighted that gold’s relative strength index (RSI) — a key momentum gauge — had remained above 70 for weeks, signalling stretched valuations. This overextension eventually set the stage for a correction once profit-taking began.
The Turning Point: From Record Highs to Rapid Sell-Off
The reversal started suddenly. Within 24 hours of hitting its peak, bullion prices slipped, as large investors and funds began unwinding positions. Bloomberg’s data showed that gold-backed exchange-traded funds (ETFs) witnessed their largest single-day outflow in five months on Wednesday, measured in tonnage terms. This wave of withdrawals — equivalent to several dozen tonnes — marked a shift in sentiment after weeks of inflows.
By Friday, spot gold had declined to ₹1.26 Lakhs per 10 grams for 24 Karat Gold.
Global Cues Behind the Correction
Several intertwined global factors triggered the reversal:
Improved US-China Trade Prospects:
Expectations of a potential meeting between US President Donald Trump and Chinese President Xi Jinping helped ease geopolitical tensions that had supported safe-haven buying. A deal to de-escalate trade hostilities reduced the need for risk hedges like gold.
A Firmer Dollar:
The Bloomberg Dollar Spot Index rose about 0.1 per cent during the week, and the US currency’s strength made gold costlier for international buyers, prompting selling pressure.
Rising Volatility:
Traders scrambled for protection through options, with one-month implied volatility in gold jumping to its highest since 2022 earlier this week. The surge in hedging activity underscored expectations of further short-term gyrations.
Lack of Positioning Data:
The ongoing US government shutdown has halted weekly reporting from the Commodity Futures Trading Commission (CFTC), leaving traders without visibility into hedge-fund positioning. This lack of transparency has likely amplified swings in speculative activity.
Together, these dynamics created a sharp shift in sentiment from exuberance to caution—a typical pattern when markets transition from record highs to consolidation.
India: Immediate Reflections of a Global Slide
1. Domestic Price Movement
In India, the world’s second-largest gold consumer, the correction in global prices has translated into a notable decline in local bullion rates. Spot prices in major Indian cities dropped by nearly ₹4,000 - ₹5000 per 10 grams over the past few days, while MCX gold futures fell below ₹7,000 per gram for the first time this month. The fall mirrors Bloomberg’s reported 6 per cent global slide, underscoring how quickly international shifts ripple through the domestic market.
2. Relief for Jewellery Buyers
The timing of the decline is significant. It arrived during Diwali, peak gold-buying periods for Indian households. After record-high prices in early October, many jewellers saw deferred purchases. The current softening may release pent-up demand, particularly in urban centres such as Mumbai, Delhi, and Ahmedabad.
3. Import and Trade Dynamics
The moderation in international gold prices provides partial relief to India’s import bill. Each US$100 decline per ounce roughly reduces the country’s aggregate gold import value by a few hundred million dollars.
4. Impact on Household Wealth
Bloomberg recently estimated that Indian households collectively hold gold worth nearly US $3.8 trillion, making them among the largest private holders globally. The recent dip slightly erodes these valuation gains, but physical ownership remains steady, indicating long-term confidence in the metal’s role as a wealth preserver.
Silver and Other Metals Mirror the Trend
Silver, often seen as gold’s high-beta cousin, also witnessed a steep retreat. After an 80 per cent year-to-date rise, the metal dropped over 6 per cent for the week, echoing the broader sell-off. Bloomberg’s warehouse data showed that Shanghai Futures Exchange vaults recorded their most significant single-day silver outflow since February, while New York inventories also fell — signalling active physical movement of metal amid price shifts.
Volatility Data Underscore Market Jitters
In the options market, Bloomberg noted that more than 2 million contracts linked to the world’s largest gold-backed ETF changed hands over just two days last week — a record turnover. This surge in activity reflects both defensive hedging and speculative repositioning as traders brace for further swings.
Volatility metrics — particularly one-month implied volatility — remain elevated. Even after the week’s decline, gold continues to trade more actively than most other commodities, highlighting its unique dual role as both a hedge and a risk asset.
In Summary
After a record nine-week rally, gold’s scorching run has cooled sharply. From an all-time high of ₹1.32 Lakhs per 10 grams for 24 Karat gold, prices tumbled over 6 per cent in just two sessions — the steepest fall in more than a decade. Bloomberg data show this correction coincided with significant ETF outflows, a stronger dollar, and improved trade sentiment.
For India, the world’s largest retail gold market after China, the impact is immediate: lower domestic rates, softer imports, and renewed consumer interest ahead of festive demand. Whether this correction proves short-lived or extends into consolidation will depend on global policy signals and investor appetite in the weeks ahead.
For now, the gold market — both globally and in India — stands at a pivotal juncture, cooling after an extraordinary climb yet still anchored by long-term structural demand.
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