Jing Ji Guan Cha Wang·2025-10-22 08:31Core Viewpoint - The international gold market experienced a significant drop after reaching new highs, with spot gold prices falling sharply, indicating a volatile market influenced by various geopolitical and economic factors [2][3][5]. Price Movement - On October 21, spot gold prices dropped by 6.3% to approximately $4080 per ounce, marking the largest single-day decline since April 2013. The closing price was down 5.31%, the largest drop in nearly 12 years [2]. - On October 22, spot gold further declined, hitting a low of $4002 per ounce before recovering to around $4139 per ounce [2]. - COMEX gold futures also fell by 5.07% to $4138.5 per ounce on October 21 [2]. Market Dynamics - The recent surge in gold prices since early 2025 saw prices rise from about $2650 per ounce to a peak of $4381 per ounce on October 20, 2025 [2]. - The decline in gold prices has negatively impacted gold-related stocks, with companies like Shandong Gold and Zhongjin Gold opening down over 7% on October 22 [2]. Factors Influencing Price Decline - The extreme market conditions were attributed to high levels of long positions in gold, leading to profit-taking by investors after a sustained price increase since September [3]. - Short-term risk factors have eased, including positive signals in U.S.-China trade relations and a de-escalation in geopolitical tensions, particularly regarding the Russia-Ukraine conflict and Middle Eastern issues [5][6]. Technical Analysis - The rapid increase in gold prices had pushed the market into an overbought state, necessitating a technical correction [6]. - The current trading structure is considered fragile, as the recent price surge was primarily driven by investors and speculators rather than central bank interventions [6]. Future Outlook - The recent price correction is viewed as a normal occurrence and is not expected to alter the long-term upward trend of gold prices, despite ongoing trade tensions between the U.S. and China [7]. - Historical trends suggest that after a prolonged increase in gold prices, adjustments of 20% to 40% may occur within the following year [8]. - The World Gold Council indicates that gold is likely to remain resilient, especially during stock market corrections, as long as there are no significant liquidity crises [9].