Key Takeaways
- • Gold has fallen nearly 25% since the US-Iran war began, briefly touching $3,975 an ounce on Friday before recovering to around $4,020 on Monday.
- • Despite the price decline, gold ETFs attracted a record $31 billion in the third quarter according to the World Gold Council, with holdings up 67 tonnes in September alone.
- • Surging oil prices have revived inflation fears, and markets price roughly an 80% chance of another Fed rate increase in December after a September hike.
- • Money managers have steadily cut bullish CFTC gold futures positions to a net 104,206 contracts as of October 20.
- • Support is weakening: global gold ETF holdings fell about 6.8 tonnes in the week of October 19, the first weekly decline since July, and GLD lost $2.3 billion over five days.
Summary
Gold has lost nearly a quarter of its value since the US-Iran war began, briefly falling to $3,975 an ounce on Friday before recovering to around $4,020 on Monday, according to the original report published via CryptoRank and BeInCrypto. The selloff has occurred even as investors poured billions into gold exchange-traded funds throughout much of the decline.
The primary driver cited is inflation. Surging oil prices have revived inflation fears, raising the likelihood of further US interest-rate increases. The Federal Reserve raised rates in September, and markets now see roughly an 80% chance of another increase in December. Higher rates make interest-bearing bonds more attractive than gold, which pays no yield. Last week's technology-stock selloff added pressure as investors sold assets to raise cash. CFTC data show money managers have steadily reduced bullish gold futures positions, reaching a net 104,206 contracts on October 20.
Demand from longer-term investors has partly offset this pressure. According to the World Gold Council, gold ETFs attracted a record $31 billion in the third quarter, and holdings increased by 67 tonnes in September despite falling prices. Physical gold-backed ETFs tracked by Bloomberg recorded 14 consecutive weeks of inflows, bringing holdings to nearly 102 million troy ounces, their highest level since mid-2022. That support is showing signs of weakening, however. Global ETF holdings fell approximately 6.8 tonnes in the week of October 19, their first weekly decline since July according to BoldETF. The largest US gold fund, GLD, lost $2.3 billion over five days, although smaller gold ETFs attracted inflows.
Gold miners have also been hit hard. Roughly 92% of stocks in the VanEck Gold Miners ETF (GDX) were trading below their 50-day moving average, the highest proportion since late July, according to The Kobeissi Letter.
The $4,000 level is now the immediate test. StoneX strategist Bob Haberkorn told Reuters he expects gold to "hang around the $4,000 level into the Fed announcement." Wednesday's Fed decision and Thursday's US inflation report could determine whether gold stabilizes or faces another selloff. Sustained ETF demand and easing rate expectations could support a recovery, while continued outflows and stubborn inflation would leave gold vulnerable to further losses.
The primary driver cited is inflation. Surging oil prices have revived inflation fears, raising the likelihood of further US interest-rate increases. The Federal Reserve raised rates in September, and markets now see roughly an 80% chance of another increase in December. Higher rates make interest-bearing bonds more attractive than gold, which pays no yield. Last week's technology-stock selloff added pressure as investors sold assets to raise cash. CFTC data show money managers have steadily reduced bullish gold futures positions, reaching a net 104,206 contracts on October 20.
Demand from longer-term investors has partly offset this pressure. According to the World Gold Council, gold ETFs attracted a record $31 billion in the third quarter, and holdings increased by 67 tonnes in September despite falling prices. Physical gold-backed ETFs tracked by Bloomberg recorded 14 consecutive weeks of inflows, bringing holdings to nearly 102 million troy ounces, their highest level since mid-2022. That support is showing signs of weakening, however. Global ETF holdings fell approximately 6.8 tonnes in the week of October 19, their first weekly decline since July according to BoldETF. The largest US gold fund, GLD, lost $2.3 billion over five days, although smaller gold ETFs attracted inflows.
Gold miners have also been hit hard. Roughly 92% of stocks in the VanEck Gold Miners ETF (GDX) were trading below their 50-day moving average, the highest proportion since late July, according to The Kobeissi Letter.
The $4,000 level is now the immediate test. StoneX strategist Bob Haberkorn told Reuters he expects gold to "hang around the $4,000 level into the Fed announcement." Wednesday's Fed decision and Thursday's US inflation report could determine whether gold stabilizes or faces another selloff. Sustained ETF demand and easing rate expectations could support a recovery, while continued outflows and stubborn inflation would leave gold vulnerable to further losses.
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