International gold and silver have entered a severe downward trend, with Shanghai gold and silver experiencing significant early declines exceeding 5%.
As of October 22, Shanghai gold futures dropped to a low of 933 CNY per gram, while spot gold in London hit a minimum of $4,002 per ounce and silver dropped to $47 per ounce.
On the evening of October 21, the previously soaring prices of precious metals reversed course dramatically. Spot gold in London touched a low of $4,086 per ounce, marking a decrease of 6.18%, while spot silver saw a peak drop of 8.72%, falling below $50 per ounce.
Gold prices, which had been "overheated," swiftly shifted to a "freeze mode." On the macroeconomic front, trade frictions have eased, and there are reports of reducing geopolitical tensions. Additionally, prices of gold and silver have consistently exceeded historical highs, leading to the accumulation of short-term risks and allowing investors to realize profits through selling.
However, industry experts believe that although there has been short-term volatility, the expectations of monetary easing have not changed, implying that this is not a trend reversal.
Xia Yingying, head of precious metals and new energy research at Nanhua Futures, noted that last Thursday, two U.S. banks reported issues related to loan fraud and bad debts, triggering a credit crisis and causing regional bank indices to plummet. In the absence of key economic data, several Federal Reserve officials issued dovish signals, indicating noticeable risks in the labor market and hinting that the window for interest rate cuts has begun to open. Overall, market risk aversion remains strong, with geopolitical concerns and rate-cut expectations still present, meaning the fundamental situation for gold prices remains unchanged.
International investment banks continue to be bullish on gold. HSBC recently stated in a commodities outlook report that the upward momentum for gold is expected to extend until 2026, driven by strong purchases from central banks, ongoing fiscal concerns in the U.S., and further expectations for monetary easing, with a target price set at $5,000.
Huaan Fund has pointed out that short-term trading in gold is overheated, presenting volatility risks. According to the implied volatility (IV) indicator for Shanghai gold futures, the current volatility of gold trading has reached high levels. Historically, similar peaks occurred on April 18, 2024, October 30, 2024, and April 18, 2025, where values exceeded 20. This indicator reflects the implied volatility of gold options and can serve as a reference for market congestion; higher values indicate risks of short-term trading overheating. The prior logic for the increase in gold prices, including the resumption of the Fed's interest rate cut cycle in September, U.S. government shutdowns, and tariff disturbances, is now adequately reflected in asset prices.
Xia Yingying further analyzed that, despite the long-term perspective of central bank purchases and growing investment demand continuing to elevate the price focus of precious metals, the short-term fluctuations spurred by trading and event-driven impacts warrant caution from investors as short-term adjustment pressures are emerging.