After its steepest drop in 12 years, gold prices have paused their upward run. Is this just a natural pause or the beginning of a deeper decline? Here are all the clues to consider.
Many investors had been expecting gold prices to reach $4,500 per ounce. After a spectacular rally that pushed it above $4,380 an ounce, gold plunged nearly 6% in a matter of hours, falling to around $4,100. A sudden decline, the sharpest in the last twelve years, which surprised even those who had been riding the strongest bullish trend of 2025 so far.
But despite the fall, gold remains at exceptionally high levels. Since January, it has gained more than 54%, driven by the flight to safe-haven assets and expectations of US rate cuts. But the rally’s own momentum has turned into a vulnerability: too much speed, too much confidence, too much speculation.
So, after a collapse like this, is it worth buying?
The answer, as often happens in markets, lies not just in the numbers but in the collective mood. According to Bloomberg data, the one-month implied volatility of gold options is at a three-year high, a sign that traders are bracing for further shocks.
Consolidation or warning sign?
Analysts are divided, but all agree that gold’s sell-off wasn’t triggered by a single factor, but rather by a series of intersecting excesses. On the one hand, a rally that was "too fast, too high, too full of speculative enthusiasm." Without a real catalyst (no shocking data, no unexpected political decision), the correction seems like the natural counterweight to a rally that had lost touch with reality.
But also a market, as some analysts say, that has simply stopped being afraid. It’s a classic case of "buy the rumor, sell the news": the uncertainty was already all in the prices, and now that the fears are fading, investors are loosening their grip. So it could be a natural pause.
Supporting this thesis, the most concrete data comes from central banks, which have continued steady gold purchases, and institutional funds, which hold it in their portfolios as a shield against future turbulence.
However, looking at Bloomberg data on implied volatility of one-month gold options, at a three-year high, the risk of further volatility remains elevated.
Is it really worth buying gold now?
It depends on the reason for buying. If your goal is to ride the next rally, the timing may still be premature: volatility is high, prices remain at historically high levels, and speculation has not completely subsided. For now, the pullback has been limited. Below the $4,000 level, prices could accelerate downwards to $3,900, then towards the support levels in the $3,600–$3,700 range.
But if the goal is to diversify and protect against possible future shocks, then gold retains its strategic appeal.
The global environment remains fragile, and factors such as falling interest rates, trade wars, and geopolitical tensions continue to justify holding a portion of the yellow metal as part of a diversified portfolio. It may no longer be the safe haven it once was, but it remains one of the most effective tools for balancing uncertainty.
For this reason, rather than asking whether it’s worth buying gold today, the real question is over what time horizon to do so. Because the precious metal, like few other assets, rewards those who have the patience to wait.
|DISCLAIMER
The information and considerations contained in this article should not be used as the sole or primary basis for making investment decisions. Readers retain complete freedom in their investment choices and full responsibility for making them, since only they know their risk appetite and time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public to save. Original article published on Money.it Italy 2025-10-22 15:01:53. Original title: L’oro crolla. Conviene comprare ora?
