Gold's Rally Hangs on Geopolitical Risks vs. Trade Optimism

Spot gold prices climbed to $3,980 per ounce on October 28, 2025, marking a 0.69% intraday gain, as investors navigated a volatile market shaped by shifting geopolitical dynamics and diverging analyst forecasts. The surge followed a sharp 3.2% rebound from the previous session's decline, which had been triggered by progress in U.S.-China trade negotiations, according to a TradingView report. Despite the recent rally, gold remains 8.1% below its record high of $4,378.69 per ounce set in October, according to The Economic Times, reflecting a technical correction after a 55% year-to-date surge driven by safe-haven demand and central bank purchases, as shown in an Economic Times forecast.

The Indian Reserve Bank's (RBI) aggressive gold-buying strategy has bolstered global demand, with India's gold reserves rising $31 billion in fiscal year 2026, Business Standard reported. "The move reflects a broader strategy to strengthen external buffers amid global uncertainty," a market participant noted. However, the metal's near-term outlook has been tempered by Citi's revised forecasts, which cut its short-term gold price target to $3,800 per ounce from $4,000, citing reduced market uncertainty following trade talks involving U.S. President Donald Trump and China's Xi Jinping, according to a Reuters report. The bank also highlighted potential resolution of the U.S. government shutdown and lower inflation expectations as headwinds for gold.

While Citi's bearish stance contrasts with some peers, major banks remain split on gold's trajectory. JP Morgan and Societe Generale have maintained higher 2026 price targets of $4,753 and $5,000 per ounce, respectively, while HSBC and Bank of America anticipate $4,600 and $5,000 by year-end 2025, the Reuters report added. The divergence underscores the market's sensitivity to macroeconomic shifts, with analysts emphasizing that sustained bullish momentum will require geopolitical and economic risks to remain elevated.

Geopolitical tensions and U.S. monetary policy continue to dominate sentiment. Gold's rebound on October 28 coincided with expectations of a 25-basis-point Federal Reserve rate cut, fueled by softer inflation data, the TradingView report said. Meanwhile, easing U.S.-China trade tensions — a key driver of the October 17 sell-off — have reintroduced risk-on appetite, pulling capital away from safe-haven assets, The Economic Times noted. "The litany of worries driving gold higher may need to become the base case to sustain this bull run through 2026," Citi warned.

Mining companies have also felt the ripple effects of gold's volatility. First Quantum reported outstanding gold collar contracts at prices ranging from $2,954 to $4,215 per ounce as of October 28 in the First Quantum report, while Centerra Gold noted that streaming agreements would lower its realized gold price to $2,655 per ounce in Q4 2025 in Centerra's results. These contractual hedges highlight the sector's exposure to price swings, with companies like New Gold reporting record free cash flow of $183 million in Q3 2025 amid higher production, according to New Gold's results.

The gold market's interplay with Bitcoin has added another layer of complexity. A recent analysis linked gold's October sell-off to a potential influx of capital into Bitcoin, which some analysts predict could push the cryptocurrency toward $200,000 if gold continues to underperform, according to a Cointelegraph analysis. This "digital gold" narrative, however, remains speculative, with traditional safe-haven demand still anchoring institutional interest.

Technical indicators suggest a critical juncture for gold. Traders are closely watching the $4,000 level as a key support, with a break below triggering further declines toward $3,838 per ounce, The Economic Times reported. Conversely, a rebound above $4,160 could rekindle bullish momentum, the Economic Times forecast added. The path forward will depend on whether geopolitical risks, central bank demand, and Fed policy align to sustain gold's premium — or if market optimism in trade relations and inflation moderation proves decisive.