International commodity and financial markets have recently experienced significant turbulence, with both international gold prices and U.S. tech stocks showing declines. Analysts suggest that the market is currently undergoing a deleveraging process, raising the possibility that gold prices might continue to drop to $3,000 per ounce.
On the last trading day of October, spot gold closed at $3,876.89 per ounce, marking a decrease of 3.61% on that day and a cumulative decline of 6.7% for the month. Similarly, silver fell by 5.79% on the same day, with its monthly losses exceeding 18%.
According to a report from a Chinese financial publication, a veteran private equity investor mentioned that several months ago, he advocated for shorting gold while going long on oil, citing adjustments in gold reserves by some central banks as a basis for his judgment. Looking ahead, he speculated, “Gold is likely to plunge to $3,000 per ounce.”
The report highlighted that on one hand, the actual interest rates in the United States remain high, significantly increasing the cost of holding non-yielding assets like gold. On the other hand, the sharp decline in tech stocks may trigger a cross-asset reduction in holdings. Some institutions that hold stocks and other leveraged positions might sell off spot gold, exchange-traded funds (ETFs), or liquidate long positions in gold futures to raise cash to meet margin calls or redemption demands.
Xiong Yuan, Chief Economist at Guosheng Securities, emphasized the importance of monitoring whether the risks from AI will further propagate into the credit market and the effects of tightening financial conditions on economic growth and the Federal Reserve’s policy trajectory.
Liao Bo, Chief Macro Analyst at Dongbei Securities, remarked that recent market fluctuations largely reflect a rebalancing of liquidity, alongside asset prices being influenced by variations in liquidity and risk appetite.
A recent weekly survey conducted by the globally recognized precious metals and commodities firm Kitco indicated that as gold prices fell below $3,900 per ounce, Wall Street’s bullish sentiment has largely shifted. Out of 16 analysts surveyed, only one—representing 6%—predicted an increase in gold prices; ten analysts, or 63%, anticipated further declines; while the remaining five analysts, making up 31%, believed that gold prices would stabilize or were uncertain about their direction.
Marc Chandler, Managing Director at Bannockburn Global Forex, stated that the allure of gold has noticeably diminished, predicting that it could further drop to $3,750 by the end of the year.
Daniel Pavilonis, a commodities broker at StoneX Group, noted that the market is currently in a deleveraging phase, and from a technical perspective, it seems likely that gold prices could continue to decline. He projected that gold may fall back to around $3,000, a scenario that could materialize in the first quarter of next year, before potentially forming a bottom and rebounding. Additionally, he warned that if there were a broader sell-off in financial markets, gold prices could be further pressured.
Technical analyst Waleed Said from GivTrade expressed that, from a technical standpoint, gold’s path of least resistance remains downward, anticipating that prices will test the support level of $3,800 per ounce.
He highlighted that the latest wave of selling has pushed gold prices well below the 200-day moving average, which is currently close to $4,490 per ounce. At the current price levels, gold is approximately 13.5% lower than this long-term trend indicator, and the technical charts continue to display clear bearish momentum.
Philip Streible, Chief Market Strategist at Blue Line Futures, indicated that as the ongoing conflict in Iran continues to drive oil prices higher, gold is likely to remain under pressure in the short term.
Streible further noted that gold tends to perform better when central banks are compelled to cut interest rates to support the economy. However, with the U.S. economy showing a robust growth rate of 3.4% in the third quarter, the Federal Reserve still has ample room to continue raising rates. He stated, “If the economy remains strong, the Federal Reserve can keep raising rates, which implies that gold will still be a target.”