Key Points

• Despite global stock market sell-offs, gold prices still fell below $3,900
• Inflation concerns and fears of the Federal Reserve raising interest rates have outweighed the demand for safe-haven assets.
• Traders are watching $3,800 as gold prices hit a one-year low

On October 30th, gold prices fell below $3,900 per ounce, hitting a one-year low, despite another round of heavy selling in global stock markets.

Spot gold fell 3.1% to $3,897.09; silver fell 6% to around $49. Gold prices have retreated by about 30% from their record high of $5,595 set in January.

This downward trend highlights an unusual market contradiction: investors are selling tech stocks due to concerns about spending on artificial intelligence, but traditional safe-haven assets are also struggling to attract buyers.

Why does the price of gold fall when the stock market declines?

During the latest round of selling, investors are increasingly expecting the Federal Reserve to maintain a tight monetary policy and may even raise interest rates again.

Inflation data released by the United States on Thursday reinforced such expectations, while the escalation of tensions in the Middle East pushed Brent crude oil prices above $117 per barrel.

Rising energy costs could prolong the inflation cycle, making interest-bearing assets more attractive than gold, which does not generate returns.

We have previously reported on this relationship when oil prices soared to around $115 and gold prices began to lose support at the $4,000 mark.

However, the decline on Friday indicates that the sell-off in global tech stocks has brought additional pressure.

Investors facing stock losses may be selling profitable positions in other assets to raise cash or meet margin requirements. Reuters cites analysts who say that forced liquidations could be a potential reason for the decline in precious metals prices.

Pressure has spread beyond gold. Silver fell below $50 for the first time in about 11 months; platinum hit a 13-month low, approaching $1,434.

Gold price forecast: Will $3,800 be the next target?

The gold price falling below $3,900 has weakened its short-term technical outlook and challenged the support levels that previously attracted buyers.

The first rebound test will be whether XAU / USD can once again reach above $3,900 and hold above $3,950.

If it can continuously break through $4,000, market sentiment will improve; the range of $4,050 to $4,100 constitutes a higher level of resistance.

However, if the weak trend continues, gold prices could fall to $3,850, followed by the psychological barrier of $3,800. The above are conditional price scenarios and are not guarantees that will actually be reached.

This decline has also weakened Morgan Stanley's previous assessment that a support level of $4,000 could be maintained, which was based on expectations of physical demand and declining bond yields.

However, Goldman Sachs remains more optimistic about the long-term prospects for gold.

Recently, it lowered its gold price forecast for the end of 2026 to $4,650. Coinpaper This point was previously mentioned in Goldman Sachs' forecast reports.

Calculated based on Friday's low, to achieve this goal, the gold price would need to rebound by about 19%, which also highlights the gap between the current price and institutional expectations.

Can central bank buying stop the decline in gold prices?

Despite the latest wave of selling, institutional demand still provides a potential long-term support for gold.

Goldman Sachs previously estimated that central banks around the world purchased 79 tons of gold in August, which is significantly higher than the historical average monthly level.

As we previously analyzed regarding central bank buying, this estimate is higher than the 39 tons of reported net purchases tracked by the World Gold Council.

The difference between the two reflects the discrepancy between estimated buying activity and officially reported transactions.

Nevertheless, the stronger demands from official authorities did not prevent gold prices from experiencing a significant decline amid worsening interest rate expectations.

The broader market reaction also indicates that central bank buying efforts are not sufficient to ensure that prices immediately form a bottom.

At the same time, persistent energy inflation remains another obstacle. Previous analyses of the oil market have emphasized that crude oil prices already include a significant geopolitical premium.