Gold Price Showdown: Will It Hit $5,000 or Drop to $3,500?

Daily News Nuggets | Today’s top stories for gold and silver investors
October 28th, 2025

Gold Takes a Breather on Trade Truce Talk

Gold prices eased on Monday, slipping below $4,000 and extending the sharpest pullback in more than a decade after news that U.S. and Chinese negotiators signaled progress toward a comprehensive trade agreement ahead of the Trump‑Xi summit in South Korea. Spot gold fell as much as 3.4%, trading under $3,980 an ounce at its weakest point as improved risk sentiment reduced safe‑haven demand.

The retreat follows a blistering run that pushed bullion to a record $4,381 last week. Many analysts say the earlier surge attracted speculative flows that became vulnerable to even modest shifts in sentiment, producing the swift correction. Still, underlying drivers such as central bank purchases, concerns over rising government deficits, and elevated geopolitical and economic uncertainty remain intact. “Gold is going through a long overdue correction,” Ole Hansen of Saxo Bank said, while cautioning that the pullback could deepen if traders turn more risk‑averse.

Some Analysts See More Pain Ahead for Gold

Not all market participants view the recent dip as a buying opportunity. Some major analysts expect further downside over the coming months. Citigroup strategists, for example, have suggested gold could fall toward $3,800 within three months, citing easing trade tensions and the potential resolution of a U.S. government funding standoff as catalysts that could weigh on prices.

At the London Bullion Market Association conference in Kyoto, World Gold Council strategist John Reade noted industry conversations that implied a lower level—around $3,500—would be a healthy reset for the market, even though that level would still be historically high. Several professional dealers have flagged that retail speculative flows drove the metal into overbought territory and that a deeper correction may be necessary before an eventual resumption of the upward trend in gold.

Wall Street Goes All‑In on $5,000 Gold

Despite bearish voices, some of Wall Street’s largest banks remain firmly bullish. Bank of America recently raised its long‑term view, forecasting a path toward $5,000 per ounce and setting a 2026 average price near $4,400. BofA points to unconventional fiscal and monetary policy choices—large deficits, a rising debt burden, and pressure to lower rates even as inflation lingers around 3%—as structural reasons why gold could continue to climb.

Other major firms share similar optimism. Societe Generale has also outlined a $5,000 target for the end of 2026, while Goldman Sachs lifted its December 2026 target to about $4,900. These banks argue that a renewed surge in investment demand—comparable to the flows seen in 2025—could be enough to drive prices significantly higher. Exchange‑traded fund inflows have surged year‑over‑year, rising roughly 880% and reaching a record $14 billion in September as investors sought alternatives to traditional stocks and bonds. Analysts continue to warn that short‑term volatility and corrections are likely, but many see the structural case for higher prices as intact.

South Korea Eyes Gold Purchases After 12‑Year Freeze

The Bank of Korea is signaling it may resume gold purchases for the first time since 2013, joining a broad wave of central banks diversifying reserves away from dollar‑heavy allocations. A bank official speaking at the LBMA conference indicated that additional gold purchases are being considered from a medium‑ to long‑term perspective.

South Korea currently holds about 104.4 tonnes of gold—roughly 1.1% of its $419 billion in foreign reserves—placing it well below many peers. The central bank has been cautious since a costly buying cycle between 2011 and 2013, but with 23 countries having added to reserves in the first half of 2025 and expectations that central banks may purchase roughly 900 tonnes this year, Seoul appears ready to reassess holdings. Recent price weakness could provide a convenient entry point as bullion trades lower from record highs.

Philippines Goes Against the Grain, Sells Gold at Peak

While many central banks have been accumulating gold, the Philippines took a different course and was a significant seller in recent periods. The Bangko Sentral ng Pilipinas sold nearly 25 tonnes of gold in the first half of 2024, making it the largest central bank seller over that timeframe, according to World Gold Council data. BSP Governor Eli Remolona defended the move, describing gold as volatile, costly to store, and a poor investment for the bank’s objectives.

The BSP’s holdings fell from about 164 tonnes in late 2023 to roughly 128 tonnes by mid‑2024, even as market prices moved higher. The sales provoked political debate at home over timing and transparency, but the central bank says it was acting to take advantage of elevated prices and strengthen dollar reserves, which have reached a record near $107 billion. That contrarian approach stands in contrast to economies such as China, Poland, and Turkey, which have been active buyers in recent years.