Buying Opportunities Emerge as Precious Metal Markets Correct

The long-awaited correction and consolidation phase in precious metals has arrived in the past week, with gold breaking its nine-week winning streak.

The yellow metal fell close to 4% in USD terms from the LBMA PM price of USD $4,294oz, set earlier in the week on October 20^th, while the intra week decline was as much as 8%, the sharpest sell off seen in more than 13 years.

The correction in silver was even more severe (or represents even more of an opportunity for those wanting to buy into price weakness), with silver now trading back below USD $49oz, after hitting USD $54oz on the 17^th of October in London trade.

While the speed of this pullback may concern some investors, it’s important to recognise that both gold and silver continue to deliver market-leading returns in 2025, outperforming other major asset classes.

No asset goes up in a straight line, even if the fundamentals underpinning this precious metal market remain as sound as ever.

From a valuation and momentum perspective, both metals had reached stretched levels earlier this month. As seen in the figure below, which shows the gold price in percentage terms relative to the average gold price over the preceding 200 days. (200 DMA).

Figure 1: Gold in USD & 200 Daily Moving Average (200 DMA) (Jan 2016–Oct 2025)

Sources: LBMA, ABC Bullion

At one point earlier in October, gold was trading a full 30% above its 200DMA, having displayed a bullish price momentum that was even more powerful than we saw back in 2020 during the height of the 2020 pandemic rally.

These periods of overextension almost always need to wear off, which is what we have seen in recent days, with speculative positioning already being unwound, outflows from financial products and several market commentators now screaming “that was the top for gold”.

That may appear a clever call for traders with a five-day view given the pullback experienced this week, but history suggests it will age poorly for those investing with a five-year horizon. The structural drivers supporting precious metals remain firmly in place, including nation-state de-dollarisation, ongoing monetary debasement and the growing need for portfolio diversification bring precious metals to the fore.

Given that back, long-term investors will likely be treating this pullback as an attractive opportunity to accumulate exposure at more reasonable price levels.

Jordan Eliseo
General Manager, ABC Bullion

Luke Tyler
Market and Business Analyst, ABC Bullion

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