Gold once dropped below $4,350! Analysis: It may stay around $4,400 in the next 1-2 weeks | Homebody Finance

Questioning AI · How do safe-haven behavior and rising interest rates interact behind the sharp decline in gold?

【Homebody Finance | Expert Face-to-Face】On the 23rd, international gold prices continued their downward trend, with spot gold briefly falling below $4,350 per ounce. As of now, spot gold has fallen 3.01%, trading at $4,356.558 per ounce. Last week, spot gold dropped 10.49%, marking the largest weekly decline since March 1983.

Wang Weimang, investment manager at Zhonghui Futures Asset Management, said that the current sharp decline in gold reflects multiple short-term suppressing factors.

First, the phased safe-haven behavior of global funds is the main reason for gold’s adjustment. When market panic or uncertainty suddenly increases, investors prioritize selling highly liquid gold positions to meet margin calls. This “lock in gains” demand amplifies technical selling pressure.

Second, the phased rise in real U.S. dollar interest rates is another core factor. If recent nominal U.S. Treasury yields increase mainly due to rising real interest rates rather than inflation expectations, this will directly suppress the non-yielding asset gold.

Third, since the gold premium before the conflict reached its highest level since 1980, global institutional holdings are relatively crowded. When triggered by liquidity crises or other factors, this can lead to a stampede.

Finally, recent Federal Reserve meetings have been neutral in tone, with almost no chance of rate cuts this year. The market is even beginning to price in a possible rate hike in December. The rise in actual interest rates has suppressed gold’s financial attributes.

Wang Weimang believes that in the short term, gold is constrained by a strong dollar and high interest rates, and it may take about one to two weeks to digest panic sentiment and liquidity pressures. The current decline is a mid-term correction within a bull market, not the end of the bull market.

He predicts that in the next 1-2 weeks, as panic emotions subside and volatility decreases, gold prices are expected to find technical support around $4,400 and below, attempting to form a bottom. In the medium to long term, the proportion of gold in global central bank reserves will continue to trend upward. The weakening of dollar credit will accelerate this trend. If the correction is deep, it could present a good entry point for long-term investors.

(The views expressed are for reference only and do not constitute investment advice. Investing involves risks; please proceed with caution.)