October 2025 gold market overview: why falling real rates keep gold on the rise

The gold market experienced an explosive rally in the lead-up to the October 2025 report. This surge occurred despite relative monetary stability and low asset market volatility, positioning the metal in technically over-bought territory. However, key macro trends, including falling real rates and elevated economic uncertainty, continue to provide strong support. This report analyzes gold's valuation, positioning, and the macro drivers influencing the market's trajectory.

Key performance snapshot

The precious metals complex produced an explosive rally over the past month.

• Gold's price settled at $3,815/oz in September 2025, marking a 10.7% month-over-month increase and a substantial 43.5% year-over-year gain.
• Other precious metals saw sharp rises: Silver and Platinum both surged by 18.8%, and Palladium gained 14.7%.

• The rally in gold was broad, with the metal also showing strength against other major currencies: up against the EUR (+8.9%), CAD (+10.6%), AUD (+9.0%), INR (+9.7%), and CNY (9.1%).

   

Gold's valuation and technical indicators

The recent rally has pushed gold's price into a technically over-bought region.

• Overvaluation: Gold is trading around 25% above its long-term real log-level trend (based on data from 2000-2025). While substantial, this level is still well below the extremes seen during the 2011-2012 period, which would require gold to rally to around $6,000/oz to reach.
• Correction risk: The price is near the top of the uptrend channel it's been in since late 2023, suggesting an increased risk of correction.

• Future targets & demand floor: Speculators are likely to be targeting $4,000/oz, with some investors eyeing a move beyond $5,000/oz. If a correction occurs, longer-term buyers (like jewellers and Central Banks) are expected to provide solid demand likely ahead of $3,500/oz

   

Positioning and demand

Despite the significant price movement, indicators do not yet point to extreme speculative positioning.

• Futures positioning: Net open non-commercial gold futures positions stood at 806.4t as of the week ending September 26. This is moderately above the past decade's average (604.5t) and well below the peaks observed in late 2024 and early 2025.
• ETF demand: Demand for gold-backed Exchange Traded Funds (ETFs) has been robust. Year-to-date, the rise in holdings is estimated to have absorbed 20.8% of total mine supply. The majority of this increase has been driven by North America (315.1t), followed by Europe (137.6t) and Asia (101.5t).
• Call options skew: Option volatility skew remains solidly in favor of gold call options ,suggesting investors are positioning for gains.

Macro drivers supporting gold

While the current strength is striking given low asset market volatility, several underlying macro factors remain supportive of gold.

• Falling real rates: As the Federal Reserve delivers interest rate cuts (fixed income futures point to a fall in the federal funds rate to around 3% by end-2026), real bond yields are likely to continue to decline. Declining real yields typically support gold's price.
• Vulnerable US dollar: The US dollar remains under pressure and is likely to weaken. Despite a recent weakening, the real US dollar index is still about 22% above its long- term downtrend, and the US current account deficit (estimated at $1,150bn this year) leaves the dollar vulnerable.
• Elevated uncertainty: Economic policy uncertainty remains elevated. The Policy Uncertainty Project's index is well above its pre-US Presidential Election average, which continues to support the metal.

Platinum's surge

Platinum also experienced a significant rally, climbing to $1,621/oz with an +18.8% MoM gain, bringing its year-to-date gain to 79.4%.

• Tight market: The outperformance reflects a combination of a supply shortfall relative to demand, limited and tightly held above-ground stocks, and the metal's illiquidity.
• Backwardation and leasing: The tight market is highlighted by surging lease rates (as high as 40% or more at present) and backwardation in prices, as industrial/commercial users and jewellers compete with investors for limited stock.
• Sustained deficit: The WPIC projects the metal is likely to be in a deficit of 850koz this year, with sustained deficits projected to deplete above-ground stocks. This implies the need for higher prices to boost supply and cool speculative demand.

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