The price of gold fell below $4,000: the “safe-haven” asset was caught up in the broader sell-off

The price of gold fell below $4,000 per troy ounce for the first time since July. Over the past week, the metal has lost 3.3% of its value, even as investors actively bought U.S. Treasury bonds and other safe-haven assets amid doubts about the sustainability of the AI boom. This was yet another sign that gold has ceased to function as a “safe-haven asset” and is now falling along with the rest of the market, according to the Financial Times (FT).

On October 23, spot gold fell to $3,986.50 per ounce, then partially recovered to close the day at $3,994.47. The previous day, the precious metal had lost 2.8%. The decline is occurring even as yields on U.S. Treasury bonds fall, the FT reports. This typically supports demand for gold: since the metal itself does not generate interest income, it benefits when bonds become less profitable.

Gold is falling in price even as investors seek to reduce risk—a “notable divergence” from the market’s usual reaction, according to analysts at Berenberg. According to their data, the last time the metal was this weak amid such a significant decline in U.S. Treasury yields was in December 2008, at the height of the global financial crisis, the FT reports.

Last year, traders actively used gold for speculative trades, which helped drive its price to a record high. On January 29, the precious metal rose to over $5,500 per ounce, but since then, according to Seeking Alpha, it has fallen by 28.7% as some speculators began to close out their positions.

The main factor behind this year’s decline in precious metal prices has been a shift in expectations regarding the U.S. Federal Reserve’s policy, according to Eric Norland, chief economist at the CME Group derivatives exchange. Instead of anticipating lower interest rates, the market began pricing in rate hikes. At the same time, “it’s striking,” Norland noted, “that gold is still significantly more expensive than it was at the beginning of 2025.” He attributes this to a combination of factors, including budget deficits that are undermining confidence in bond markets, rising inflation, ongoing geopolitical tensions, and continued gold purchases by central banks. According to preliminary data from the World Gold Council, central bank purchases of gold in September reached their highest monthly level since November 2024. The organization’s data is based on information from central banks and the International Monetary Fund.

Analysts at Berenberg believe that a close below $4,000 on Friday is particularly significant for the market. If the price of gold settles below this level, it could trigger further outflows from exchange-traded funds (ETFs) that invest in the precious metal and intensify technical selling of gold mining stocks. The mining sector is already experiencing its worst week in seven months, according to the FT: shares of BHP and Rio Tinto have fallen 6% and 7%, respectively, over the past five days.

John Reed, senior market strategist at the World Gold Council, attributed the price fluctuations to the war in the Middle East and its impact on the markets. According to him, high interest rates have somewhat reduced the appeal of investing in gold, while high energy prices have limited consumers’ ability to buy the metal. With no demand for gold as a safe-haven asset this year, fundamental factors are playing a greater role than usual, he added.

At the same time, some fund managers who spoke at the Financial Times conference on the precious metals market last week still expect prices to rebound, the newspaper notes.

This article was AI-translated and verified by a human editor