Gold prices faced their most significant single-day fall in over five years this week, plummeting more than 5% from previous record highs, which in turn dragged Bitcoin into a correlated selloff that wiped out billions in market capitalization. The precious metal dropped from an all-time peak of $4,381 per ounce to an intraday low of $4,082—a decline not seen since the 5.7% crash in August 2020. Simultaneously, Bitcoin fell over 2%, retreating from levels around $110,000 and testing crucial support near $108,000 as the correlation between these two safe-haven assets reached an impressive 0.85.
This dramatic shift in gold prices was attributed to profit-taking after an impressive rally that had seen prices skyrocket by 60% throughout 2025 and 25% in just the preceding two months. Analysts characterized the movement as a “technical correction,” noting that a record influx of $34.2 billion into precious metals over ten weeks had pushed the market into overbought conditions. Bart Melek, North American head of commodity strategy at TD Securities, stated that dealers were taking profits after a prolonged rally that proved unsustainable in the long run.
The fallout from gold’s decline accelerated as the US dollar index strengthened by 0.4%, making gold more expensive for international buyers and diminishing its appeal against competing assets. This timing was compounded by renewed optimism surrounding US-China trade negotiations, as President Trump expressed increasing confidence about reaching a deal with Chinese President Xi Jinping. The easing of global geopolitical tensions served to lessen the demand for gold, which had previously surged to successive record highs.
Physical demand for gold also sagged after the conclusion of the Diwali festival in India, traditionally a period of heightened buying for the precious metal, further impacting prices. The market for silver experienced an even sharper decline, crashing by 8.7%—its worst single-day drop since February 2021—while platinum saw a decrease of 5-7%, indicating a broad correction across the precious metals sector.
Analyzing Bitcoin’s movements revealed a direct reflection of gold’s troubles, with the strengthened correlation between the two assets further underpinning the synchronized selling pressure. Bitcoin concluded Tuesday’s trading at $108,342, registering a drop of over 2% as it revisited local support levels around $108,000, aligning with late August lows.
Charts indicated that Bitcoin had momentarily rebounded on Monday prior to sharply pulling back in response to gold’s nosedive. It reaffirmed the critical support around $108,000, which serves as both a consolidation floor and key psychological marker. Importantly, the 200-day exponential moving average continues to provide support, indicating that Bitcoin remains in a technical bullish trend. However, any breakdown below the $108,000 support level could lead to further declines, testing $100,000, a crucial psychological round number.
Market indicators suggest that many analysts utilize various financial metrics, including M2 money supply and stock-to-flow models, among others, to forecast Bitcoin’s trajectory in the current climate. Some have proposed that the market may see Bitcoin emerging as a “laggard” in relation to gold’s earlier rally.
The intensified correlation between gold and Bitcoin—rising from a negative 0.8 in October 2021 to the current 0.85—provides insight into the simultaneous pressures faced by both assets. Mostafa Al-Mashita, co-founder and director of sales at Secure Digital Markets, explained that gold’s transformation into a geopolitical tool and Bitcoin’s establishment as a decentralized asset reflect a broader reallocation of trust, with states seeking to assert control through gold while individuals turn to Bitcoin for economic independence.
Initially on Tuesday, Bitcoin momentarily surged above $113,000 as traders shifted capital from gold to cryptocurrency. However, this brief optimism quickly gave way to a risk-off sentiment, which ultimately pulled Bitcoin lower as broader market trends dictated investor behavior.
As for gold’s technical outlook following the drop, analysts suggest that it could have ample room for correction, potentially heading toward $3,400, aligning with the 200-day exponential moving average, before any stronger rebound emerges. The extensive market capital lost—approximately $2.1 trillion on Tuesday—equated to 55% of the entire cryptocurrency market’s value, illustrating the vast scale of this recent correction.
The key levels moving forward include immediate resistance for gold between $4,200 and $4,235 and significant support zones at $4,035 and $4,000. For Bitcoin, crucial resistance to watch lies between $110,000 and $113,000, with key support remaining at $108,000. The broader pressures facing both assets highlight the ongoing challenges and dynamics that traders will have to navigate in the weeks to come.
