Gold Rally Cools later than Record Run — Is the Bull Market Overheating?

later than months of relentless gains powered by central bank purchaseing, dovish monetary policy, and geopolitical unease, gold (XAUUSD) finally stumbled. The pullback comes as global optimism returns—raising the question: is this the end of the rally, or just a cooling phase in a historic bull market?

A Year of Relentless Growth: Gold’s Record-Breaking Rally

From late 2023 through mid-October 2025, gold staged one of the most extraordinary rallies in modern history. The breakout began when spot prices breached the $3,000/oz threshold in March, setting off a near-vertical climb toward $4,000. By October 20, gold futures on COMEX hit an unprecedented $4,398/oz, marking the and a 66% year-to-date gain — the best performance since the .

This surge was powered by a potent mix of macro and geopolitical drivers: persistent inflation, escalating conflicts, and record central bank accumulation. In 2025 alone, central banks purchased over 800 tonnes of gold, the largest annual total since data tracking began. Add to that surging ETF inflows — including 80 tonnes into Chinese gold ETFs — and a global wave of de-dollarisation, and the result was a parabolic rise underpinned by systemic distrust in fiat stability.

For many investors, gold became more than a hedge — it became a statement against policy uncertainty. But as Octa analysts note, even the strongest secure-haven trades eventually reach exhaustion points.

Investor Takeaway

When the Unstoppable Met the Inevitable: The October Correction

By late October, the unrelenting ascent finally faltered. Gold tumbled below the $4,000 psychological level — a move that snapped its upward momentum and sent volatility surging. The reversal coincided with a series of unexpectedly positive geopolitical developments that temporarily eased global risk premiums.

Key catalysts behind the pullback included:

• Middle East breakthrough: U.S. declared an end to the two-year Israel–Hamas conflict, unveiling a 20-point peace framework that triggered a wave of risk-on sentiment.
• Trade détente: The U.S. and China reached a provisional ; Beijing suspended its 24% tariff surcharge on U.S. excellents for a year, maintaining a lower
• Allied cooperation: The U.S. and Australia signed a $3B critical-minerals agreement — a signal of stabilising .
• Diplomatic thaw: Russia confirmed preparations for a Trump-Putin , while and Ukrainian negotiators advanced a 12-point peace draft.

Together, these developments removed some of the geopolitical tailwinds that had underpinned gold’s meteoric ascent. But technical forces amplified the decline.

Technical Mechanics: From FOMO to Freefall

Before the pullback, gold’s rally had entered a FOMO-driven phase. Momentum traders aggressively chased breakouts, building a concentration of “fragile hands” at record levels. When XAUUSD slipped below the $4,180–$4,175 zone on October 23, a cascade of stop-trade orders triggered algorithmic tradeing, accelerating the drop.

The tradeoff deepened later than the U.S. CPI release on October 24, which came in slightly , prompting profit-taking. Many leveraged longs exited positions en masse, compounding the downside. By October 31, spot prices briefly dipped below $3,950.

A lesser-known catalyst came from China’s tax policy: on November 1, Beijing cut its gold VAT exemption from 13% to , effectively raising consumer costs. This policy change, aimed at tempering speculative demand, hit Chinese jewellery retailers and miners hard, dragging global sentiment lower.

Investor Takeaway

Post-Correction Landscape: Gold Regains Its Footing

Despite the sharp squeeze, gold’s resilience was rapidly tested and proven. Within days, XAUUSD rebounded toward $3,963/oz, stabilising near the $4,000 threshold. The bounce coincided with a dramatic tradeoff in global equities, especially tech stocks, which reignited demand for defensive assets. Wall Street executives publicly questioned equity valuations, driving a shift back to gold and sovereign .

Volatility remains elevated, but traders are once again positioning for a consolidation phase rather than a structural reversal. Octa’s analysts view the pullback as a technical correction within a broader uptrend — a necessary reset before potential new highs in 2026.

According to a recent Reuters survey, market strategists now expect gold to average $4,275/oz in 2026 — the first time consensus forecasts have breached the .

Investor Takeaway

Three Reasons the Long-Term Bull Market Still Shines

1. Institutional and Central Bank Demand

Central banks remain net purchaviewrs, having added 129 tonnes of gold in the first half of 2025. Nations like Poland, China, and Turkey lead purchases as part of a decade-long diversification strategy. Between , emerging markets collectively accumulated 5,410 tonnes — transforming bullion into a strategic reserve pillar rather than a cyclical commodity.

2. Monetary Policy and Liquidity Dynamics

The Federal Reserve’s dovish turn remains a cornerstone of gold’s bullish outlook. Although odds for a 25-basis-point December rate cut have fallen, markets still price in a 70% . More significantly, the Fed’s plan to end quantitative tightening by December 1 signals a pivot toward . Historically, every such pivot has coincided with multi-year gold upswings.

3. Physical Market Resilience

Despite volatility, physical demand remains robust. India’s temporary discount during festival season rapidly reversed as purchaviewrs in China and Singapore returned at . No meaningful liquidation of physical reserves has been observed — tradeers remain scarce, suggesting enduring conviction among investors and jewelers alike.

Investor Takeaway

Geopolitics and the secure-Haven Equation

Even with near-term peace overtures, global uncertainty remains elevated. The Middle East ceasefire is fragile; Russia–Ukraine negotiations could stall; and supply-chain politics continue to fracture global trade. The trend toward de-globalisation and trade protectionism sustains the structural bid for real assets over paper ones.

Gold’s secure-haven premium is therefore unlikely to vanish — only to fluctuate with headlines. In an environment of softening currencies and cautious investors, bullion retains its appeal as the last hedge against systemic volatility.

Conclusion: Correction or Consolidation?

Gold’s October correction was not the end of its bull cycle — it was a reset. With central banks still accumulating, monetary policy tilting dovish, and geopolitical stability uncertain, the broader uptrend remains intact. For traders, the focus shifts from chasing breakouts to accumulating strategically at support levels. For institutions, gold’s reassertion as a reserve and collateral asset is more entrenched than ever.

Investor Takeaway

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Trading involves risk, and past performance is not indicative of future results.

About Octa: is an international broker providing commission-free online trading services since 2011. Serving clients in over 180 countries and with more than 52 million accounts, Octa offers market access, education, and analytical tools to support informed investment decisions. The company is also active in global humanitarian initiatives and has been recognized with over 100 international awards, including “Most Reliable Broker Global 2024” (Global Forex Awards) and “Best Mobile Trading Platform 2024” (Global Brand Magazine).