Speculative market participants are reducing their exposure to gold for the fifth consecutive week: since September 22, positions totaling $19.5 billion have been closed. For short-term investors, this creates a risk of further price declines, as the share of such players in the open interest structure remains high.
Long-term holders, by contrast, are getting an opportunity to build positions at more attractive prices. The key sources of demand for the metal — central banks and Asian buyers — have not changed their strategy, and the current correction creates a historically significant entry point.
Who is selling gold and why
The most active in reducing positions are hedge funds, including trend-following (CTA) and macro funds, as well as large proprietary traders and small market participants. In the week from October 20 to 27, long positions (bets on price increases) worth $5.2 billion were closed and new short positions (bets on price declines) worth another $2.8 billion were opened. As a result, the aggregate net position — the difference between long and short bets — shrank from approximately $130 billion at its peak to $85 billion, returning to the October 2025 level.
About 95% of the selling came from other large traders and small participants, while hedge funds played a relatively modest role. The largest contribution — $4 billion — came from the closing of long positions in the first of these groups. Among the triggers for the sell-off are concerns about states' liquidity needs, rising oil prices, and a stronger dollar.
The risk of further sell-offs remains. The share of other large traders is close to 18% of open interest — all outstanding futures contracts — whereas in February it dropped to 11–12%. At the same time, the long-term picture is different: central banks continue purchasing, China remains a major source of demand, and countries' desire to reduce dependence on the dollar is not weakening.
How the sell-offs affected the price and funds
Pressure from speculators has already affected prices: gold experienced its worst October since 2008, and an ounce was worth $3,875 at the close of trading on October 30. Hedge funds have been cutting long positions for nine consecutive weeks — if new holders abandon the metal, the decline could deepen.
Long-term investors had until recently been smoothing the decline: inflows into gold exchange-traded funds (ETFs) reached a record $31 billion in the third quarter. However, this support has also begun to weaken — gold ETF assets in the week to October 19 declined by approximately 6.8 tonnes for the first time since July, and investors withdrew $2.3 billion from the largest fund, GLD, over five days.
Cryptalist analysis: The current dynamics reflect not a break in the long-term trend but a redistribution of positions between speculative and strategic capital. Institutional demand from central banks and sustained interest in de-dollarization remain structural support for the metal. For the cryptocurrency market, this is a signal of continued appetite for safe-haven assets — gold and bitcoin will continue to compete for the status of "digital safe haven" during periods of macroeconomic instability.