After hitting record highs earlier in October 2025, gold seems to be losing its glitter post Diwali. Gold prices plunged on the Multi-Commodity Exchange (MCX) to ₹123,552 per 10 grams ahead of US inflation data on October 24th. As per reports, experts are attributing the sharp fall in gold prices to factors such as profit booking, a stronger dollar, and an anticipated US-China trade deal. Read this blog to understand why gold prices are falling after continuing a nine-week upward rally.
Key Reasons Why Gold Prices Are Falling
Gold prices have witnessed a correction after nine weeks of successive increase in rates, owing to various global, economic and political factors.
Experts are attributing this sharp fall in gold prices to the following factors:
Profit Booking After Record Highs
One of the main reasons gold prices are falling this week is profit booking, as investors cash in on gains after a sustained increase in price. Gold prices have increased by approximately 56% YTD in 2025. According to an ET report, this correction in the price of gold is seemingly technical in nature.
Easing Tensions Between the US and China
Earlier this year, gold prices surged through various global and geopolitical uncertainties, including the Russia-Ukraine war. However, the anticipated trade talks and easing of tensions between the United States and China are yet another reason the safe-haven asset is losing some of its value. During global and economic uncertainties, investor preferences tend to shift toward gold from conventional markets.
US Inflation Data and Strengthening US Dollar
The fall in gold prices was also attributed to investor caution ahead of the US Consumer Price Index (CPI). As per a latest Financial Express report, US inflation has come in lower than expected, while the core CPI has also risen less than expected. This cooler-than-expected data has reinforced expectations of a Federal Reserve rate cut.
The strengthening of the US Dollar Index has also made gold more expensive for buyers with non-USD currencies. This combination of easing inflation and a stronger dollar has reduced gold’s appeal as a hedge, contributing to this week’s price correction.
Has the Gold Rally Come to an End?
While we witnessed a massive surge in gold prices earlier this year, the rates have plunged this week leading to questions as to whether the sustained rally has finally come to an end. As per a CNBCTV18 report, the outlook is still bullish despite the volatility. While the prices may consolidate in the short term, but gold, as a safe haven asset, remains structurally strong due to factors like consistent central bank buying.
To Conclude
Gold’s recent price dip is a natural correction after an extraordinary rally, influenced by global macroeconomic factors like easing inflation and a stronger dollar. For investors, this could be a strategic entry point. But for those looking to unlock liquidity without selling their gold, gold loans provide a hassle-free way. Explore Poonawalla Fincorp’s hassle-free Gold Loan and enjoy benefits like competitive interest rates, quick approval and more!
Frequently Asked Questions
Why are gold prices dropping after reaching record highs?
Gold prices are dropping due to factors such as profit booking by investors, a stronger US dollar, easing geopolitical tensions, and reactions to the latest US inflation data. These factors are driving short-term corrections in the market.
What impact does the US inflation data have on gold prices?
The latest US CPI report shows a 0.3% monthly rise in inflation, slightly below expectations. This cool-off in inflation is reducing gold’s appeal as a hedge, especially with expectations of a Fed Rate cut looming.
Can I get a Gold Loan against my gold instead of selling it during this dip?
Yes. You can get funds without selling your gold through trusted financial institutions. Poonawalla Fincorp gold loans offer benefits like quick disbursal, competitive interest rates, and safe storage of your gold.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply