(News Bulletin 247) – The precious metal shows a significant decline this Tuesday, October 21, after constantly pushing back its records.

After having pushed its records ever further, reaching up to 4,381.5 dollars per ounce, gold had to take a breath.

The raw material fell by more than 5% this Tuesday, October 21, weighed down by profit taking. Around 4:35 p.m., an ounce of gold (31.1 grams) lost 5.18% to $4,130.4.

The yellow metal had not experienced a drop to this level since 2020 and the first months of the Covid pandemic. Over the whole of 2025, the precious metal remains up 56.5%.

Usually driven by geopolitical and economic tensions, gold may currently be driven by a slight warming in Sino-American tensions.

“Demand for precious metals as safe havens has calmed somewhat, as US President Donald Trump and Chinese President Xi Jinping prepare to meet next week to iron out their trade differences, and as the seasonal buying period in India has ended,” underlines the Bloomberg news agency.

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A set of factors

Since the start of the year, gold has been driven by a multitude of factors. The political and geopolitical uncertainties caused by Donald Trump’s erratic economic policy, particularly with customs duties, have reinforced the role of gold as a safe haven. Especially since other traditional safe haven values, such as the dollar, American bonds (but also the yen with the upcoming arrival of a Japanese Prime Minister favorable to fiscal recovery and inclined to advocate for low rates) have seen their status weakened this year.

Significant purchases by central banks, particularly from China and emerging countries, have been a tailwind for almost two years now.

“Initially, this trend was driven by countries’ concerns about sanctions on their foreign assets following decisions by the United States and Europe to freeze Russian assets. However, this trend has evolved into a broader strategy of diversifying dollar reserves and dollar assets,” UBS pointed out in February.

More recently, the start of the cycle of rate cuts by the American Federal Reserve (Fed) last September further strengthened the metal’s appeal.

As a reminder, lower rates tend to support gold. Unlike stocks (with dividends) and bonds (with coupons), gold does not produce income. Its price is therefore helped by a fall in interest rates, because it then becomes more and more interesting to invest your money in gold rather than investing it.

The weakness of the dollar, which has suffered against other world currencies since the start of the year, constitutes another technical support factor.

Like all raw materials, gold prices are denominated in dollars. A decline in the greenback makes, all things being equal, gold less expensive for investors whose base currency is not the dollar.

Ready to climb further

Finally, the “shutdown”, that is to say the paralysis of a large part of American federal services and, to a lesser extent, the climate of political uncertainty in France kept the rally going.

The research offices unanimously believe that gold will progress further. Goldman Sachs estimates that an ounce will reach $4,900 next year.

This rally is not without asking certain questions. “Gold typically shines when economies are on the brink of recession, financial markets are in freefall and central banks are easing monetary policy. What sets the recent rally apart is that it is occurring against a backdrop of rising stock markets, solid economic growth and relatively high interest rates,” Barclays asks in a recent note.

“This unusual recovery in gold could be a sign of unease with the global fiscal and monetary order,” adds the British bank.