Good Time to Buy Gold? Yellow Metal Loses Its Glitter on Diwali; Here’s Why Prices Fell Sharply

Tuesday, October 21, 2025 — As people across the world celebrated the festival of lights, the sparkle dimmed for one of the most beloved asset classes — gold. The yellow metal, often considered a safe haven, witnessed its sharpest Intraday decline in five years, losing much of its glitter in a single trading session.

Just a day earlier, on Monday, gold had touched a record high of $4,381.44 per ounce. However, on Tuesday, volatility struck. The steep fall was largely attributed to optimistic comments from U.S. President Donald Trump about a potential trade deal with China, which prompted profit booking in the safe-haven metal. Adding to the pressure was a stronger U.S. dollar, which made dollar-denominated commodities like gold more expensive for holders of other currencies. Moreover, technical indicators suggested overbought conditions, triggering further selling.

Interestingly, the yellow metal regained some shine on Wednesday, October 22, 2025, as prices rebounded from key support levels. Gold bounced back from its 20-day moving average (20-DMA), which stood at $4,022.61, and as of 12:48 PM IST, it was trading at $4,140.09, up 0.36 per cent. Despite Tuesday’s sharp decline, gold remains a stellar performer — up 58.32 per cent year-to-date (YTD) and 12.70 per cent over the past month.

On the daily chart, the XAU/USD pair is commonly known as the gold spot price quoted in U.S. dollars has formed a ‘Tweezer Top’ candlestick pattern, typically a bearish reversal signal that appears after an uptrend. This pattern consists of two candles — a green one followed by a red one — with nearly identical highs, suggesting that bullish momentum may be waning and bears could be gaining control.

With prices rebounding from the 20-DMA, the key question now is whether this marks a buying opportunity. The answer depends on whether gold can sustain above the 20-DMA support in the coming sessions. A sharp rally may be unlikely in the immediate term; a period of consolidation above this level would be a healthier sign for the next leg of the uptrend.

Disclaimer: The article is for informational purposes only and not investment advice.