Gold fell by almost 30%. Has "safe harbor" leaked?
Back in January, gold set records of over $5,500 per ounce. And it's now trading around $4,100 - almost 30% below the peak.
The fall turned out to be not particularly successful: in September the metal lost 8.5%, in October - about 7% more. This is the worst October for gold since the 2008 crisis.
In November, the quotes recovered a little, but it is difficult to call it a full recovery: gold is still trading around $4,000 and is close to a yearly low.
What brought down the main protective asset?
The main reason is the American tariffs. The Fed kept them at 3.75-4% in October, and the market is waiting for a possible increase in December.
This is bad news for gold. When dollar bonds offer high yields, it becomes less profitable to own a metal that pays no coupons and no dividends. In addition, the strengthening of the dollar puts additional pressure on the quotes.
But the most interesting thing happened on October 30. US technology stocks fell sharply, and gold, instead of its usual growth, fell another 3.5%.
why? Investors urgently needed money to cover losses and secure positions. Therefore, they even sold protective assets. In moments of panic in the stock market, gold can also become a source of cash.
What about the buyers? are you done
Just not. According to the data of the World Gold Council, in the third quarter investors invested a record 31 billion dollars in gold ETFs. And central banks bought another 39 tons of the metal in August alone. Moreover, in September, gold funds withdrew $10 billion, although the price of gold itself fell by 8.5%.
That is, some investors continued to accumulate metal, while others actively closed speculative positions in the futures market. And the sellers have proven stronger so far.
What to expect next?
Now a lot depends on the Fed. If US inflation remains high and rates continue to rise, gold could fall further: yield bonds will attract money.