Gold, silver extend rout after massive sell-off as rally loses shine

SYDNEY – Gold and silver extended declines on Oct 22, following their steepest sell-off in years the previous day, as investors locked in profits on concern the recent surges in precious metals had left them overvalued.

Spot gold fell as much as 3 per cent to trade near US$4,000 an ounce, before paring losses. That came after it tumbled as much as 6.3 per cent on Oct 21 in the biggest intraday decline in more than a dozen years.

Spot silver dropped again after posting an intraday loss of 8.7 per cent on Oct 21.

Shares of Singapore-listed CNMC Goldmine plunged on Oct 22, falling as much as 12.4 per cent to $1.06, before paring losses. The stock closed down 5 per cent at $1.15.

The company, which mainly mines and processes gold in Kelantan, Malaysia, saw its shares rally 394 per cent in 2025 up till Oct 21, from 24.5 cents at end 2024.

The gold and silver sell-offs came after technical indicators showed scorching rallies for both precious metals were likely overstretched.

Spot gold was down 0.8 per cent to US$4,091.33 an ounce at 4.52pm in Singapore. Silver declined 0.4 per cent to US$48.48 an ounce.

Platinum and palladium also declined, after posting losses of more than 5 per cent each on Oct 21.

The pullback has brought an abrupt halt to a months-long advance that had seen both precious metals post record highs in recent days. Gold is coming off its ninth straight week of gains and prices remain about 55 per cent higher in 2025, underpinned by central-bank buying and inflows to exchange-traded funds (ETFs), along with soaring demand for safe havens in the face of geopolitical and trade tensions. 

“It could also be that people thought – what the hell, most of us are long and at great averages, so it’s a good time to take profit,” said Mr Nicholas Frappell, global head of institutional markets at ABC Refinery in Sydney. 

Gold had also soared in large part because of bets on the US Federal Reserve making at least one outsized rate cut by year end, as well as the so-called debasement trade, in which some investors have pulled away from sovereign debt and currencies to protect themselves from runaway budget deficits.

Citigroup cut its overweight gold recommendation after Oct 21’s slump, citing concerns about stretched positioning. The bank’s commodities research team expects further consolidation at around US$4,000 an ounce in the coming weeks.

“Eventually, the older part of the gold bull story – continued central bank demand to diversify away from the US dollar – may come back, but at current levels there is no rush to position for that,” they wrote. They added that prices had “run ahead of the ‘debasement’ story”.

On a technical basis, the move in gold is a correction for now – albeit “a huge one”, said Mr Nick Twidale, chief market analyst at AT Global Markets in Sydney. 

“My simple explanation is – the market has been driven by huge reallocation flows and there were some big players taking profit, and that would have triggered stops on the way down,” he added.

“If it breaks cleanly through US$4,000, we could see an even bigger capitulation.”

The declines also came as investors weighed potential progress in talks between the United States and China, following a recent resurgence in tensions that had bolstered demand for haven assets.

President Donald Trump on Oct 21 predicted an upcoming meeting with Chinese counterpart Xi Jinping would yield a “good deal” on trade, while also conceding that the highly anticipated talks may not happen.

For silver, a historic squeeze in the London market last week drove prices beyond the record set in 1980, during a notorious attempt by the Hunt brothers to corner the market. Benchmark prices traded above New York futures, prompting traders to ship metal to the British capital to ease tightness.

On Oct 21, silver in vaults linked to the Shanghai Futures Exchange saw the biggest one-day outflow of the metal since February, while New York stockpiles have also fallen. BLOOMBERG