Gold (XAU/USD): Buyers Return After Sharp 8% Correction
Gold (XAU/USD) has witnessed heightened volatility in recent sessions, swinging sharply in both directions. After falling 1.7% on Friday, 17 October 2025, the metal rebounded 2.4% on Monday, 20 October 2025, setting a new record high at US$4,381.
That momentum quickly faded as Tuesday, 21 October 2025, brought a steep 6.3% intraday plunge. Gold later recovered some ground to end the session at US$4,125, still down 5.3%, marking its worst daily drop since August 2020.
Short-Term Weakness, Long-Term Trend Intact
The sell-off was likely driven by stop-loss triggers on leveraged long positions, following the strong rally that began after the 29 August 2025 breakout from a four-month Ascending Triangle pattern. This pullback appears to be a phase of profit-taking rather than a trend reversal.
Overall, both technical indicators and macroeconomic drivers continue to favor Gold’s broader bullish outlook over the medium to long term.
Technical Highlights
- Price Movement: Gold has corrected 8.6% from its record high of US$4,381 to a recent intraday low of US$4,004 (as of Wednesday, 22 October 2025).
- RSI Momentum: The hourly RSI dropped to an oversold reading of 19.61, showing a bullish divergence — a classic sign of potential rebound.
- Candlestick Setup: Gold formed a bullish “Hammer” on the hourly chart during the Asian session after retesting its rising 20-day moving average. A developing daily “Hammer” pattern further points to bearish exhaustion and recovery potential.
These signals together suggest that a short-term bullish reversal may already be in motion, though volatility remains a key factor in the near term.