Gold records its sharpest drop since 2020 before stalling at a crucial support zone. US stocks trade mixed as uncertainty over the U.S.-China trade meeting persists.
Gold rebounded, with mixed performances in the US stock market
Key takeaways
- Gold volatility spikes: XAU/USD surged to a record high of US$4,381 before plunging 6.3% intraday, its sharpest drop since August 2020. This was likely triggered by cascading stop-loss liquidations.
- Key support holds: Gold’s sell-off stalled near the crucial US$4,056/4,000 zone, where it recovered partial losses, suggesting potential short-term stabilisation.
- US stock market mixed: Equities paused after recent gains amid uncertainty over US-China trade talks and conflicting comments from President Trump.
Gold (XAU/USD) has witnessed volatile movements in the past three sessions. The precious yellow metal has managed to reverse the 1.7% loss it incurred last Friday, 17 October 2025, and rallied by 2.4% on Monday, 22 October 2025, to print a fresh record high of US$4,381.
Thereafter, it recorded a swift decline on Tuesday, 21 October 2025, when it tumbled by 6.3% on an intraday basis. However, it pared back some losses to close at US$4,125 with a daily loss of 5.3%, still a significant occurrence as yesterday’s loss was the worst since August 2020.
The potential key catalyst that triggered Tuesday’s swift sell-off is likely due to stop-losses triggered on massive short-term leveraged long positions on gold that cascaded into a rapid downward spiral.
Interestingly, at the start of today’s Asia session, gold (XAU/USD)’s intraday decline of 2.9% has managed to stall at the US$4,056/4,000 key medium-term support zone and pared back its losses to 0.3% at the time of writing.
The US stock market took a breather on Tuesday after two consecutive sessions of gains. Mixed performances were seen among the major US stock indices. The Dow Jones Industrial Average led with 0.5%, the S&P 500 and Nasdaq 100 closed almost unchanged, while the small-cap Russell 2000 underperformed with a loss of 0.5%
Mixed messaging from US President Trump on US-China trade relations also contributed to Tuesday’s lacklustre session in the US stock market. Trump mentioned that he predicted an upcoming meeting with Chinese President Xi would yield a good trade deal, while also conceding that the highly anticipated meet-up at the end of October in South Korea on the sidelines of the APEC Summit may not materialise.
Our YouTube video above contains more insights and the latest intraday technical analysis on our Charts of the Day, Japan 225, and Gold (XAU/USD).
