Gold slips under $4,000 as stock market rout intensifies

what happened

Gold dropped below $4,000 an ounce, touching its weakest level since mid-July, TradingView reported. The metal shed as much as 0.9% to just under $3,990 after nearly a 3% slide on Thursday, though losses later narrowed.

Equity markets extended their decline on Friday as investors moved out of AI-linked shares and into US government debt, with Treasuries broadly holding the previous session's gains. Silver lost 1.2% to $53.90 an ounce. Justin Lin of Global X ETFs called the move a “liquidity-driven selloff,” explaining that gold is often sold in sharp downturns to cover margin calls and capital requirements. He said the metal was near a key $3,900 level.

Doubts about the durability of AI spending, a major engine of US growth, have reduced traders' bets on a Federal Reserve rate hike next week, with the odds of a quarter-point move now under 10%. At the same time, Brent rose above $113 a barrel after Houthi militants claimed strikes on Saudi targets, including the Red Sea port of Yanbu.

why it matters

Two forces are pulling in opposite directions. Lower yields and fewer rate-hike bets usually support bullion, but costly oil keeps inflation elevated and has hindered gold's recovery. According to TradingView, gold has lost more than a fifth of its value since the US-Iran war began in late February. OCBC analyst Christopher Wong argued that broader risk reduction and inflation worries may be outweighing the benefit of lower yields.

market impact

Gold and silver: forced selling and oil-driven inflation worries weigh on precious metals; Brent: supply risks support crude prices

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