Gold’s One-Year Low Set Off Stop-Losses as Retail Traders Bought the Dip

Gold's recent decline below $4,000 triggered a significant increase in automated stop-loss orders at brokers, particularly at eToro where pre-set exits made up 47% of position closures on October 30, more than double a typical day. The metal fell more than 3% that Friday to end near $3,874 an ounce, its lowest close since October 2025, as a selloff in technology stocks spread across markets.

Despite the price drop, retail traders continued to increase their long positions. According to data from Myfxbook, which tracks about 15,000 positions with a 60-minute delay, long volume rose 74% from the start of October 30 to the market's reopening. The number of long positions increased by 34% to 12,548, making up 72% of the volume by reopening, up from 61% on Friday morning.

Retail Traders Bought the Dip

Brokers that publish client positioning showed a similar tilt. IG reported 87% of client accounts were long gold, while across brokers tracked by FXSSI, the average was 72.9% long, ranging from 85.7% at OANDA to 63.7% at XM. This pattern of increased long positions during price drops was also observed when gold first broke below $4,000 on October 22-23, when long volume rose 35% to 1,668 lots.

Brokers Face Margin Risk

The build-up of long positions created significant margin risk for brokers. The average entry price of those longs was $4,223 on Monday, leaving traders nearly 8% under water—more than the 5% margin a retail client in the EU or UK posts on gold at maximum leverage. For some brokers, gold makes up 50% to 90% of their volumes, depending on the region.

Trade Nation clients demonstrated this behavior, choosing to "average into their long positions, buying into the fall," according to Daniel Pitts, the firm's head of trading. Automatic closures rose only slightly from a typical day, and clients did not significantly reduce their gold positions. Trade Nation made no changes to margin requirements for precious metals.

Institutional Investors Sold

While retail traders increased their exposure, larger investors sold. Hedge funds had been net sellers of gold futures for nine straight weeks according to Commitments of Traders data, according to Saxo Bank's Ole Hansen. Holdings of gold-backed exchange-traded funds fell by six tonnes in the last week of October, he said, citing Bloomberg data.

eToro set temporary maximum exposure limits for clients opening gold CFD positions over the weekend after the drop, though these limits have since been removed and trading conditions returned to normal. Neither eToro nor Trade Nation reported execution or pricing problems during the October move, which was smaller than gold's 8% slide on January 30, a day after its record high.