Gold ended October with its weakest result since the 2008 crisis: the price stopped at $3,875 per ounce, and over the last trading day the metal plunged 3.6%.
When trading resumes, the main risks fall on recent buyers. Since July, investors have added about 150 tonnes to gold exchange-traded funds (ETFs), and now a significant portion of these investments is trading below the purchase price.
The sell-off is not over yet
Saxo Bank commodity strategist Ole Hansen notes that the market is being driven by chart-oriented participants. Gold broke support around $3,970 and closed below $3,886 — the October 2025 low.
According to Hansen's estimate, hedge funds have been cutting long positions in gold for nine consecutive weeks. If even more holders start locking in losses, the decline could drag on and deepen.
The situation in the stock market is adding pressure. Hedge funds have just recorded the largest exodus from equities since 2017, primarily driven by shares of companies working with AI.
Market commentator Prem Soni explained Friday's drop in the gold market by margin calls: brokers were demanding money from those who had bought technology stocks on credit.
"When you're overloaded with credit and you have no cash at all, you don't sell what you want. You sell what you can," he noted.
Since the start of the war with Iran, Brent crude has risen 10% in price, while gold has fallen 4% over the same period. Rising oil prices fuel inflation and force the Fed to keep rates high. Gold generates no income, so at high rates it becomes a less attractive asset.
Who believes the largest sell-off is already over
Economist Robin Brooks issued a comment after gold on Friday once again fell below $4,000 amid talk of possible US strikes on Iran.
"If war is about to flare up with renewed force, gold will suffer, but the decline will be limited…," he believes.
Ronnie Stoeferle of the asset management company Incrementum tracks how many speculators are leaving the market. According to him, the number of bullish contracts on silver has fallen from 42,756 in July 2025 to 3,321.
He adds that only 10% of gold mining companies are trading above their 200-day moving average — a widely used long-term trend line. Analyst Rashad Hajiyev believes that 2026 will be a pause before a possible rise in gold to $10,000 in 2027 or 2028.
Factors for gold's movement this week
On Tuesday, the US holds midterm elections. On Friday, the October employment report will be released.
According to Hansen, a recovery above $4,000 would help improve the situation somewhat in the short term. However, in his view, a deeper stock market decline could force the Federal Reserve to cancel the two rate hikes that investors are still expecting. He believes that the current sell-offs in the stock market are hurting gold, but could ultimately support it.
Cryptalist analysis: The current correction in gold is primarily technical and liquidation-driven in nature, rather than reflecting a deterioration in fundamental drivers. The mass closing of long positions by hedge funds and margin calls amid the sell-off in technology stocks are creating short-term pressure, but structural demand for safe-haven assets and the risks surrounding Iran preserve the potential for a recovery. The key trigger for a reversal will be a signal from the Fed of a softer tone.