Gold Market Correction: A Healthy Pause Before the Next Rally
Wednesday, October 29th 2025
A Sudden Break in Gold’s Winning Streak
After an impressive nine-week rally, gold’s relentless climb has finally paused. The precious metal, which kicked off the week with new record highs above $4,355 per ounce, suffered one of its sharpest declines in years after Tuesday’s London session opened to heavy selling pressure. By week’s end, spot prices hovered around $4,112 per ounce, down 0.32% on the day and more than 3% from last Friday’s close.
Despite the turbulence, the correction appears to have done little long-term technical damage. Prices have held steady above the critical $4,000 support level, suggesting the current dip may be more of a “cooling-off period” than a trend reversal.
Technical Reset After Parabolic Gains
According to Lukman Otunuga, Market Analysis Manager at FXTM, investors regained some optimism after softer inflation data boosted expectations of a Federal Reserve rate cut next week. However, Otunuga warned that momentum remains fragile:
“The technical picture favors bears in the short term. Weakness below $4,050 could open the path toward $4,000 and potentially lower.”
Ole Hansen, Head of Commodity Strategy at Saxo Bank, echoed a similar sentiment. He views the recent selloff as a necessary adjustment rather than a panic-driven crash:
“This correction is flow-driven, not data-driven. A softer CPI leaves room for the Fed to cut rates, but whether $4,000 is the final low is too soon to tell. Monday’s drop signaled the start of a consolidation phase that was overdue and healthy.”
Gold’s Core Fundamentals Still Intact
Even as traders brace for short-term volatility, analysts agree that gold’s broader bullish story remains intact. The market is entering a consolidation phase—mirroring the sideways trend seen between May and August when prices stabilized above $3,000.
Michael Brown, Senior Market Analyst at Pepperstone, believes gold will likely trade between $4,000 and $4,400 in the coming weeks.
“The bull market isn’t over—it’s just catching its breath. The recent decline looks like a classic case of a rally going too far, too fast, leading to profit-taking.”
Rising global debt, continued central bank gold accumulation, and ongoing macroeconomic uncertainty are still powerful tailwinds supporting higher long-term prices.
Analysts View the Pullback as Constructive
Neil Welsh, Head of Metals at Britannia Global Markets, said the recent turbulence was overdue and beneficial for market stability:
“Gold’s volatility appears to be a constructive correction, not a reversal. With inflation risks, central bank demand, geopolitical tensions, and expected Fed rate cuts still in play, prices should remain between $4,000 and $4,200 before the next leg higher.”
Welsh added that a move from $4,100 to $5,000 may take longer than the explosive rally that preceded it, but such a phase could attract “dip-buying” investors eager to capitalize on temporary weakness.
Safe-Haven Demand Still a Key Driver
Ryan McIntyre, Managing Partner at Sprott Inc., emphasized that gold’s safe-haven appeal remains strong:
“It’s hard to see gold falling significantly when geopolitical and economic uncertainty are both so high.”
His remarks come amid renewed U.S.-China trade negotiations and escalating tensions as President Trump suspends talks with Canada. With political and financial volatility persisting, investors are clinging to gold as a defensive asset.
Central Banks and the Fed Take Center Stage
Next week’s economic calendar offers limited new data as the U.S. Congress remains deadlocked over budget approvals. All eyes, however, are on the Federal Reserve’s upcoming policy meeting.
The CME FedWatch Tool indicates that markets have fully priced in a 25-basis-point rate cut, with another one expected in December. Despite inflation holding slightly above the Fed’s 2% target, most analysts do not believe it will derail the ongoing easing cycle.
According to Naeem Aslam, Chief Investment Officer at Zaye Capital Markets:
“Much of the optimism is already priced in. There’s a chance we’ve seen this year’s peak, and gold could retest $3,800 if the FOMC meeting sparks renewed pressure.”
A Global Week of Monetary Decisions
The week ahead is loaded with central bank activity beyond the U.S.
- Bank of Canada will release its policy decision on Wednesday morning.
- Bank of Japan follows late Wednesday night.
- European Central Bank (ECB) will hold its meeting Thursday morning.
Each decision could subtly influence gold sentiment, especially if policymakers hint at dovish measures or economic weakness.
The Bottom Line: A Pause, Not a Reversal
Gold’s nine-week winning streak was due for a break, and this correction might just be the breather the market needed. With support intact at $4,000, cooling inflation data, and multiple rate cuts on the horizon, analysts largely see the pullback as healthy rather than harmful.
The yellow metal may be resting now—but for many, the next leg higher is only a matter of time.
