Explained | Why gold prices are falling today after hitting all-time highs

After touching an all-time high earlier this week, gold prices slipped on Thursday (October 23) as investors turned cautious ahead of key US economic data and a stronger dollar weighed on sentiment.

Here’s what’s driving the latest movement — and what lies ahead.

A pause after a sharp rally

Gold prices have surged nearly 56% so far in 2025, climbing past the $4,000 an ounce mark for the first time in October. Analysts say the latest dip is a healthy correction after an extended rally.

“We’ve seen a correction that is normal after the recent rally, and there’s still some downside pressure,” said Brian Lan, Managing Director, GoldSilver Central. “In the longer term, we remain bullish, but investors should stay cautious in the short term.”

As of Thursday (October 23) morning, spot gold slipped 0.2% to $4,084 per ounce, while US futures held near $4,100 an ounce.

 Stronger dollar adds pressure

A firmer US dollar has made gold more expensive for non-dollar holders. The dollar index rose 0.2% against major currencies, limiting demand for the metal, which is priced in US dollars globally.

In India, the world’s second-largest gold consumer, prices stood at around ₹12,508 per gram for 24K gold and ₹11,465 for 22K gold, reflecting global weakness.

Markets await key US inflation data

Traders are awaiting the US Consumer Price Index (CPI) report, due Friday (October 24), for clues on the Federal Reserve’s next move. The report, delayed due to the US government shutdown, is expected to show that core inflation stayed at 3.1% in September.

Markets have largely priced in a 25-basis-point rate cut at the Fed’s upcoming meeting. Gold usually benefits from lower interest rates, as they reduce the opportunity cost of holding non-yielding assets like bullion.

Geopolitical shifts cool safe-haven demand

Gold’s rally this year was fueled by geopolitical tensions, rate-cut bets, and central bank buying. But recent signals of potential de-escalation in global conflicts have slightly reduced safe-haven demand.

US President Donald Trump has hinted at progress in US-China trade talks and is expected to meet Chinese President Xi Jinping next week.

The administration also imposed fresh sanctions on Russian oil firms but suggested it could help broker a peace deal between Russia and Ukraine.

Margin calls and volatility drive short-term sell-off

According to Manav Modi, Analyst – Precious Metals Research, Motilal Oswal Financial Services, the current volatility stems from profit-taking and technical factors.

“No major fundamental has changed; the market is just finding equilibrium as riskier assets see renewed buying,” Modi said. “Panic selling and margin calls at elevated levels have triggered short-term volatility.”

Outlook: Volatile but still bullish long term

Analysts say gold may consolidate in the short term but remains structurally strong due to sustained central bank buying, geopolitical uncertainty, and expectations of further monetary easing.

Short-term moves, however, will hinge on the US inflation print and Fed commentary next week.

-With Reuters inputs