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Gold fell below $4,000 a troy ounce on Friday for the first time since July, capping a tough week for the precious metal, the latest sign that it is no longer functioning as a safe haven.
Bullion prices fell as low as $3,986.50 on Friday before regaining ground, after losing 2.8 percent on Thursday. Prices are down 3.3 percent this week.
The fall in gold, “despite the risk-averse environment,” constitutes a “notable divergence,” Berenberg analysts said.
It is often used as a safe-haven investment, while falling bond yields are generally positive for the metal, which does not offer a return on its own.
But as investors flocked to U.S. Treasuries and other safe havens on Thursday amid concerns over the AI boom, and even as investors recently lowered their expectations for higher U.S. interest rates, gold was still sold off this week.
Gold’s fall, amid risk aversion in markets, comes after it was used as a speculative asset by traders last year. That helped push its price to a record high of more than $5,400 per troy ounce in January, before falling by more than a fifth following the departure of some of those traders.
Berenberg analysts said the last time bullion was this weak while Treasury yields posted such a big fall was December 2008, at the height of the global financial crisis.
Demand for gold ETFs fell in the first half before rebounding in the third quarter following strong sales in September. Berenberg said whether the gold price closes above or below $4,000 an ounce on Friday would be significant because “a confirmed close below $4,000 would likely trigger further ETF outflows and technical selling in the gold equity complex.”
Gold mining stocks suffered their worst week in seven months, with BHP and Rio Tinto both falling more than 8 percent.
In addition to this week’s trading pattern, gold has generally been hit this year by markets sharply raising their expectations for an interest rate hike by the U.S. Federal Reserve.
Erik Norland, chief economist at derivatives exchange CME Group, said the main factor contributing to the decline in precious metals prices this year was the shift from expectations of rate cuts to rate increases.
But he said it was “surprising” that prices were still significantly higher than at the start of 2025. He attributed this to a combination of budget deficits shaking confidence in bond markets, rising inflation, geopolitics and central bank purchases.
Central bank gold purchases in September reached their highest monthly level since November 2024, according to provisional data from the World Gold Council. The figures were compiled by the trade association using data from the central bank and the IMF.
Several fund managers said at last week’s FT Precious Metals Summit that they still expected gold to rebound.
John Reade, senior market strategist at the World Gold Council, said at the summit that gold prices were shaken by the war and its fallout on markets.
“Rising interest rates have made investing in gold a little less attractive. High energy prices have… hurt consumers’ ability to purchase gold,” Reade said. “Fundamentals have been more important this year in the absence of safe-haven buying.”
Gn bussni
