Gold Had Its Worst October Since 2008: Will It Crash Further This Week?
Gold closed at $3,875 an ounce on Friday, marking its worst October performance since the 2008 financial crisis with a 3.6% drop in the final session alone.
The precious metal ended the month with significant losses, breaking below key support levels at $3,970 and closing below $3,886, its October 2025 low. Recent buyers are most exposed, as investors added approximately 150 tonnes to gold exchange-traded funds (ETFs) since July, with much of it now trading below cost.
The selloff coincided with intensified selling across global technology and AI-related stocks, creating a broader market downturn that has pressured gold prices.
Market Pressure Factors
Hedge funds have cut bullish gold bets for nine consecutive weeks, with the biggest stock pullback since 2017 led by AI shares. Market commentator Prem Soni characterized Friday's drop as a margin call, where brokers demand cash from investors who bought tech stocks on credit.
When you are over leveraged and have zero cash flow, you don't sell what you want to sell. You sell what you can sell.
Since the Iran war began, a 10% jump in Brent crude has corresponded with a 4% drop in gold, as higher energy prices feed inflation and keep US rate hikes alive. Gold pays no interest, making it less attractive when rates rise.
Contrasting Views
Economist Robin Brooks noted that while an escalation of the Iran conflict might weigh on gold, the downside is limited. Asset manager Ronnie Stoeferle pointed to significant reductions in speculative positions, with bullish silver bets shrinking from 42,756 to 3,321 contracts since July 2025.
Ugly tape, but look under the hood.
Analyst Rashad Hajiyev suggested 2026 represents a consolidation phase after 2024-2025's run, potentially setting up another significant upside to $10,000 in 2027-2028. Currently, only 10% of gold miners trade above their 200-day average.
Key This Week
Gold's next movements will be influenced by Tuesday's US midterm elections and Friday's October jobs report. A recovery above $4,000 would help calm the short-term picture, according to Ole Hansen of Saxo Bank. However, a deeper stock crash could lead the Federal Reserve to drop the two rate hikes markets still expect.
Ironically, the stock rout that is currently hurting gold might eventually help it if it forces the Fed to pause its monetary tightening cycle.
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