In October 2025, caution on precious metals was advised as the gold bull market faced potential corrections amid rising prices. Central banks have increased gold reserves, fueling a self-fulfilling prophecy of higher prices. Factors supporting gold include inflation concerns, geopolitical tensions, and a weaker U.S. dollar. However, high prices and potential corrections loom as downside risks.

Gold prices corrected in December 2025 after reaching an October high, falling 11.3% from $4,398 to $3,901.30. Central banks have increased gold reserves by 1,000 tons annually, with forecasts of further growth. China and Russia, major gold producers, likely understate actual gold holdings due to strategic and security reasons.

The bullish trend for gold is driven by its historical role as an exchange medium, increasing central bank reserves, and a weakening U.S. dollar. Retail and institutional buying support the upward trajectory. Factors like debt levels, currency devaluation, and interest rate cuts further bolster gold prices. However, corrections and potential downside risks persist.

Gold’s parabolic rally faces potential corrections after reaching new highs in recent years. While the long-term bullish trend remains intact, the current lofty price levels pose downside risks for investors. Accumulating gold as a portfolio diversifier requires caution and strategic buying to manage risks. The future trajectory of gold prices is uncertain, with possibilities of further highs or corrections.

Read more at Yahoo Finance: Have We Seen the Highs in Gold for 2025?