Market Panic After Fed Comments and US-China Trade Peace Signals
Market Panic After Fed Comments and US-China Trade Peace Signals
Global gold prices (loco gold) plunged more than 6% on Tuesday, October 21, 2025, hitting a two-week low below US$4,050 per ounce after hitting a record high above US$4,300 just days earlier.
This was the sharpest daily decline since 2020.
1. Hawkish Statement from FOMC Member Waller
The first trigger came from a speech by Fed member Christopher Waller, who emphasized that although inflation was starting to ease, interest rate cuts must be approached with extreme caution.
His comments dashed market expectations that the Fed would cut interest rates by up to 50 basis points in its final two meetings of the year.
As a result, the US dollar strengthened sharply and the 10-year US bond yield re-surfaced above 4.7%, triggering massive outflows from non-yielding gold.
2. Positive Signals from US–China Trade Relations
The second factor comes from the geopolitical side:
US President Donald Trump and Chinese representatives are reportedly set to hold a follow-up meeting in Malaysia at the end of October, with talks described as "productive."
The market immediately interpreted this as easing trade tensions, leading to a decline in demand for safe-haven assets like gold.
When global risks diminish, investors tend to return to riskier assets like stocks or corporate bonds.
3. Massive Profit-Taking
Gold had previously risen more than 60% throughout 2025, and in the past two weeks alone, it has risen more than 8%.
This rapid rise has prompted many large investors—including gold ETFs and central banks—to take profits.
Once the price broke through the technical areas of $4,200 and $4,150, selling pressure intensified as retail and institutional traders' stop-loss orders were triggered.
4. Dollar Strengthening and Global Risk Sentiment
The dollar index (DXY) surged to near 107.4, its highest level in nearly two months.
In addition, global stock markets rallied after US economic reports showed solid employment and retail sales data, indicating the US economy remains strong despite high interest rates.
This situation has caused gold to lose its appeal as a safe haven.
5. Pressure from Asian Physical Markets
Physical demand in India and China has slowed slightly due to overvalued gold prices after the record high of $4,300.
Dealers reported premiums in India fell by almost 40%, indicating reduced demand as people await lower prices ahead of the festive season.
Today's Gold Technical Analysis (October 22, 2025)
Technically, gold's short-term trend has turned corrective after breaking through strong support at $4,120.
If selling pressure continues, the next potential support level is at $4,020, with $3,950 a key psychological area.
However, as long as prices remain above $3,950–$3,980, the broader trend remains structurally bullish. Immediate resistance now lies at $4,180 and $4,250, which must be broken to confirm the return of upward momentum.
Source: Newsmaker.id
