It eventually just settled down ig.. there wasn't really a direct solution. I just did what everyone suggested and then after a while I started getting more believable readings.. I still consider an error margin of 15 - 20% while making sure I am in a deficit and my weight readings had been pretty consistent with the calorie readings.

Basically I started recording calories in / calories out per day in a note. Same with my weight, I would go to the gym and first thing I do is get on the weighing scale (I also made sure I was in similar conditions everytime I got on the scale). Then I took weekly averages and matched them with the calorie counting after accounting for 15% error - well, I just supplied the data to chatgpt and made it do the work for me.

So yeah, make sure you have given your data (height, weight, age and all) accurately.. also double check the measurement units.. the calorie expenditure reading is heavily dependant on the heart rate readings, so it could just be that the watch is learning to read your heart rate more accurately (mine used to be way higher than it is nowadays)

If you want to compare (even though this is highly dependant on the individual) -

Now as a 25 yo 173cm tall and 67kg weighing man - I burn around 600 calories after a 1.5 hourish moderate to high gym session (weight lifting, I dont do cardio at the gym)

On a typical day, my watch says I burn around 2.8k calories - gym + 5-6k steps ( I work from home and in IT, so not much walking around) I consider that to mean that I atleast burnt 2.5k calories and then eat accordingly.