If margin-call selling was a major factor on Friday, part of the decline could reverse once leveraged positions are cleared, which is why Commerzbank expects a recovery. That makes the tech sector an unusual short-term driver for gold: further AI-led equity losses could trigger more forced liquidation, while stabilisation in stocks would remove the pressure. The bigger influence is still oil. Throughout the Iran war, gold has tended to fall on escalation and rise on easing tensions, as oil feeds Fed hike expectations. Monday’s dip in crude on Qatar-brokered talks is therefore potentially supportive, while renewed attacks on Gulf shipping point the other way. US jobs data on 6 November and inflation data on 10 November will test December hike bets.
—
Earlier:
—
Gold didn’t fail as a safe haven on Friday so much as get sold to pay for losses elsewhere, but the oil-driven Fed threat that has dogged it all year was still in the background.
Summary:
- Gold fell more than 3% on Friday to its lowest level in a year, below $3,900, and is down about 30% from its record high
- Commerzbank said the sharp fall in tech stocks may have triggered margin calls and forced selling of safe-haven assets, and expects precious metals to recover
- Higher oil prices, firmer US inflation and rising expectations of a December Fed hike also weighed, after the Fed held rates with two officials voting to raise them
- Earlier in the week, Commerzbank noted gold was falling even as rate expectations eased, suggesting other forces were at work
- Commerzbank has argued gold’s link to oil and Fed expectations will keep it under pressure until the Strait of Hormuz reopens
Gold’s slump to a one-year low on Friday owed as much to the stock market as to the metal itself, with analysts pointing to forced selling as investors raised cash to cover losses in technology shares.
The metal fell more than 3% to below $3,900 an ounce, its lowest level in a year, leaving it down about 30% from its record high. The decline coincided with a sharp sell-off in tech stocks, as doubts grew over whether heavy investment in artificial intelligence will pay off.
Analysts at Commerzbank said in a note that Friday’s fall in technology stocks may have led to forced selling of safe-haven assets such as gold, as well as margin calls, Reuters and CNBC reported. The bank added that it expected precious metals to recover. When leveraged investors face margin calls, they tend to sell their most liquid holdings, and gold, after a long rally earlier in the year, was an obvious candidate.
Some commentary has gone further, arguing that the plunge had nothing to do with fundamentals. That overstates the case. Higher oil prices and firmer US inflation data strengthened expectations that rates will stay elevated, reducing the appeal of non-yielding gold. The Federal Reserve held rates at 3.75% to 4.00% last week, with two officials voting for an immediate increase, and markets now see a strong chance of a hike in December. Reports have treated forced selling as a likely amplifier of the decline rather than its sole cause.
Commerzbank’s own analysis adds some nuance. Earlier in the week, its analysts noted that gold had fallen back below $4,000 even as US rate expectations eased and real yields declined, and said the decline had not been triggered by a shift in rate expectations. That suggested other pressures were already at work before Friday’s tech rout.
The episode fits a broader pattern Commerzbank has highlighted since the start of the Iran war. Rather than rallying as a safe haven, gold has tended to fall when the conflict escalates and rise when tensions ease, because higher oil prices push up inflation and Fed hike expectations. In June, the bank lowered its end-2026 forecast to $4,800 from $5,000 while keeping its end-2027 target at $5,200, arguing that gold’s structural support, including rising government debt, remained intact and that a recovery depended on the oil shock easing.
The near-term path may hinge on two things: whether the tech sell-off deepens, prompting more forced liquidation, and whether progress toward reopening Hormuz eases oil prices and, with them, pressure from the Fed.
This article was written by Eamonn Sheridan at investinglive.com.