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Gold prices witnessed an unexpected and steep correction after recently touching record levels. After a strong rally through the month, the precious metal suddenly came under heavy selling pressure, leading to a sharp fall in both domestic and global markets.

On the commodities exchange, gold futures dropped dramatically from their previous closing levels. During afternoon trading, prices slipped to around ₹1,55,569 per 10 grams, marking roughly a 9 percent fall compared to the previous day’s close. Although some recovery was seen later in the session, the metal was still trading significantly lower than its peak levels.

Just a day earlier, gold had climbed to an all-time high near ₹1.82 lakh per 10 grams on the futures market. The rapid reversal surprised many traders who had been witnessing a continuous upward trend.

Partial recovery after steep fall

After the sharp dip, prices managed to regain some ground by evening, but losses remained notable. Futures were still down nearly 5 percent, hovering around ₹1,61,000 per 10 grams. This kind of intraday volatility highlighted how quickly sentiment shifted from aggressive buying to equally strong selling.

In the international market, spot gold also weakened and slipped below the psychologically important $5,000 per ounce mark, trading near $4,988 per ounce. The global decline added further pressure on domestic prices.

Why gold had surged earlier

In the weeks leading up to this fall, gold had enjoyed an exceptional rally. Rising geopolitical tensions and uncertainty in global markets had boosted demand for safe-haven assets. At the same time, expectations that interest rates could be reduced in the future made non-yielding assets like gold more attractive.

From the beginning of the month until the recent peak, gold had delivered extraordinary returns. In fact, the monthly gain was among the strongest seen in decades, with prices rising around 28 percent in less than a month. Such a rapid climb created conditions for a sharp correction.

Key reasons behind the sudden drop

Market experts point to two main triggers behind the decline.

The first factor is related to developments around the US Federal Reserve leadership. Signals that the next central bank chief could take a more aggressive stance on monetary policy strengthened the US dollar. A stronger dollar typically puts downward pressure on gold because the metal becomes more expensive for holders of other currencies and loses some of its appeal as an alternative store of value.

When currency markets began to price in the possibility of tighter policy under new leadership, traders quickly reduced their gold positions, leading to heavy selling.

The second major reason is profit booking. After such a powerful and fast rally, many short-term investors chose to lock in gains. When an asset rises too far, too fast, it often attracts selling from traders who want to secure profits before any correction deepens. This wave of selling intensified the fall once prices started slipping.

Volatility after an extraordinary month

The recent surge had made this month particularly remarkable for gold, with one of the strongest monthly performances in many decades. However, such exceptional rallies rarely continue in a straight line. Corrections are common as markets rebalance.

The latest decline therefore reflects a mix of currency movements, changing interest rate expectations, and natural market behaviour after a sharp rise. Even though prices bounced slightly from the day’s lowest levels, the episode shows how sensitive gold is to global macro signals and investor positioning.

For traders and investors, the move serves as a reminder that while gold can act as a long-term hedge, short-term price swings can be intense, especially after record-breaking rallies.