Gold, which has surged nearly 50% over the past year and become one of 2025's standout trades, fell 1.15% on Tuesday, dropping below $3,950 per ounce. The metal was about 10% below its record high of $4,400 reached in late October.
The remarkable rally earlier this year was driven by softer U.S. real yields, increased geopolitical uncertainty, and significant purchases by central banks from emerging market economies aimed at diversifying away from the U.S. dollar and reducing their overdependence on the currency. Inflation and concerns about the durability of economic growth further encouraged investors to shift their focus toward tangible assets, such as gold.
Meanwhile, the US dollar index reached a three-month high. A firmer dollar makes gold more expensive for international buyers, therefore suppressing global demand.
The recent volatility may also reflect shifting expectations for the Federal Reserve’s policy. The Fed cut rates by 25 basis points in October, and Jerome Powell suggested this might be the final reduction of the year. Before his remark, markets had priced in a 91% chance of another cut in December; that likelihood has since fallen below 70%.
Equity markets mirrored the cautious sentiment. The S&P 500 fell about 1% by mid-session Tuesday as a stronger dollar and reduced chances of further Fed easing weighed on investor sentiment.
At the same time, the ongoing U.S. government shutdown has added uncertainty to markets. The suspension of official economic data reporting — including employment and inflation reports — has left traders relying on private-sector data, such as the ADP National Employment Report and jobless claims, to determine the health of the economy. With fewer reliable data points, sentiment-driven trading has dominated short-term gold movements.
Beyond the U.S., global shifts could also shape the metal’s outlook. Expectations of a potential interest rate increase in Japan may also influence gold demand in the months ahead.
On November 5, 2025, gold prices appeared to stabilize after the sharp decline seen earlier this week. The market remained cautious as traders awaited key U.S. economic data and further information from the Federal Reserve. In the near future, gold’s trajectory will depend on upcoming U.S. employment and inflation reports, which could influence expectations for future moves. If the data indicate signs of economic softening, prices may regain support. For now, investors remain alert, waiting for clearer policy and macroeconomic signals.
Despite a short-term decline, analysts state that gold remains supported by inflation concerns and ongoing geopolitical risks, which continue to strengthen its appeal as a safe-haven asset.
This article was written in cooperation with tradingview