Gold dipped below $4,000 a troy ounce on Friday for the first time since July, marking a sharp decline as the precious metal failed to act as a safe haven during a broader market sell-off. Prices fell as low as $3,986.50 before recovering slightly, down 3.3 per cent for the week. Analysts at Berenberg noted the drop was a "notable divergence" given the risk-off backdrop, with investors instead rushing into US Treasuries. The decline follows gold’s use as a speculative asset last year, which drove prices to a record high of over $5,400 in January before a subsequent crash.
The sell-off has impacted gold mining stocks, with BHP and Rio Tinto both falling more than 8 per cent, marking the sector's worst week in seven months. Erik Norland of CME Group attributed the decline to shifting expectations regarding US interest rates, noting that markets have moved from pricing in rate cuts to anticipating rate increases. Despite this, prices remain significantly higher than at the start of 2025, supported by budget deficits, rising inflation, and central bank buying. Central bank gold purchases reached their highest monthly level since November 2024 in September. While some fund managers still expect a rebound, John Reade of the World Gold Council noted that fundamentals, rather than safe-haven demand, have driven prices this year.
Source: Financial Times Markets · Summarized by HeadlinesBriefing