Gold’s Record Rally Comes to a Sudden Halt
Gold prices plunged for the second consecutive day, marking their worst drop since 2013 and abruptly ending what had been the strongest rally of the decade.
On Wednesday, gold futures fell $43.70, or 1.06%, to close at $4,065.40 per ounce, following a brutal 5.74% crash on Tuesday. The back-to-back losses erased almost 8% of gold’s value since Monday, when the metal briefly reached an all-time intraday high of $4,398 per ounce, according to UBS.
Mining stocks weren’t spared either - Barrick Gold and other major producers slipped more than 1%, as traders scrambled to lock in profits after weeks of relentless gains.
Analysts Call It a “Technical Selloff”
UBS analysts led by Wayne Gordon said the decline wasn’t triggered by weakening fundamentals but rather technical market positioning.
Despite the correction, gold remains one of 2025’s top-performing assets, still up over 50% year-to-date and nearly 5% for October alone. UBS maintains that the core drivers of the rally - inflation pressures, political uncertainty, and tariff tensions under President Donald Trump - remain firmly in place.
The “Debasement Trade” Faces a Reality Check
The selloff has fueled debate over whether the so-called “debasement trade” - investors ditching dollars for hard assets like gold - may be losing steam. The U.S. dollar index has climbed nearly 2% in the past month, outpacing both the S&P 500 and gold itself.
In just the past week, the dollar gained 0.3% while gold dropped 3%, suggesting that money might be rotating back into cash as sentiment shifts.
Andrew Brenner, head of international fixed income at NatAlliance Securities, said this could mark either the start of a broader reversal or simply a short-term correction.
Volatility Surges to Pandemic-Era Levels
Adding to the uncertainty, Goldman Sachs analysts noted that spot gold’s volatility relative to the S&P 500 has reached its highest level since 2020, signaling potentially wilder price swings ahead.
Despite the dramatic pullback, gold’s performance this year has crushed nearly every other asset class. Its 54% surge year-to-date dwarfs the S&P 500’s 14% gain and even outpaces tech heavyweights like Nvidia and Meta that led Wall Street’s AI-driven rally earlier in 2025.
The Bottom Line
While the recent crash caught investors off guard, analysts agree it’s likely a technical correction rather than the end of gold’s historic run. The metal remains one of 2025’s biggest winners - but with volatility now spiking, the next few weeks could test just how durable that shine really is.
