Gold, which climbed above five thousand dollars an ounce in February, has since fallen about a fifth to near four thousand, and the slide has led one Korean brokerage to read the wreckage as an opening rather than a warning. Rising expectations of American interest rates, pushed higher by oil-fed inflation worries, have made the metal that pays nothing less attractive, and the decline has been compounded by investors who sold gold alongside stocks to raise cash. Whether this proves a bargain or the beginning of a deeper fall depends on a question no report can settle: how long the inflation fe
Gold's 20% Slide Draws Buy Calls as Analysts Eye Year-End Window After Rate-Driven Selloff
Gold was sold alongside stocks, a sign of investors raising cash
Mark
Gold fell about 20% and a brokerage says buy. Why is that notable?
Mimi
Because the report argues the fall outran the reasons for it. Rate expectations are up more than 1.5 points this year, but the market has priced in only another 0.5 to 0.75 points of hikes, and they say gold has overreacted to that.
Mark
What's the evidence it was a forced sale?
Mimi
Stocks and gold both fell last month. Gold usually acts as a haven, so selling alongside equities suggests people raising cash.
Luke
That's an inference, though. The report doesn't show who sold or why. Falling together is consistent with liquidation, but also with plain rate pressure hitting both.
Mark
And the demand picture?
Mimi
Mixed. Jewelry spending hit a record even as volumes fell. ETFs saw inflows in Q3 and central banks added gold, but physical bullion and coin demand has fallen since Q1.
Luke
So the support is partial. Also, this is one brokerage's view, and brokerages have a stake in calling a buying window.
Mark
What about the 2022 to 2023 comparison?
Mimi
Rates rose 5.25 points and gold went from $1,980 to $1,960, essentially flat, so tightening didn't crush it then.
Luke
Flat isn't a rally, and one past cycle is a thin base. The report itself concedes that if oil keeps inflation high, hikes could exceed expectations and gold could drop further.
Mimi
Which is why the watch items are central bank buying and ETF flows.
Il Polso
- Spot gold has tumbled roughly 20% from its February peak above $5,000, now hovering near $4,000 an ounce.
- Rising U.S. rate expectations and climbing real yields are pressing on a metal that pays no interest, while oil-driven inflation fears keep the pressure alive.
- Gold was sold alongside stocks last month, a sign of cash-strapped investors liquidating holdings rather than a verdict on the metal's fundamentals.
- LS Securities calls the drop excessive and names November and December the ideal buying window, citing the cheapest valuations since 2022.
- The outcome now hinges on whether inflation forces further rate hikes, and on whether central bank purchases and ETF inflows hold steady.
Gold, which climbed above five thousand dollars an ounce in February, has since fallen about a fifth to near four thousand, and the slide has led one Korean brokerage to read the wreckage as an opening rather than a warning. Rising expectations of American interest rates, pushed higher by oil-fed inflation worries, have made the metal that pays nothing less attractive, and the decline has been compounded by investors who sold gold alongside stocks to raise cash. Whether this proves a bargain or the beginning of a deeper fall depends on a question no report can settle: how long the inflation fear will last, and whether the central banks and funds that have been quietly accumulating gold will keep doing so.
Spot gold, which touched more than $5,000 an ounce in February, now trades around $4,000, a fall of roughly 20%. The decline has prompted LS Securities to tell investors that the weakness is a chance to buy. In a report dated the 8th, the Korean brokerage said gold has entered its cheapest valuation range since 2022 and named November and December as an ideal window.
The path down was not straight. Gold briefly recovered toward $4,600 in August before sliding back. The main culprit, the report says, is a shift in expectations for U.S. monetary policy. Oil-driven inflation worries have pushed the rate path investors expect higher by more than 1.5 percentage points this year, and real long-term rates have climbed on a steep rise in Treasury yields. Because gold pays no interest, that makes it less appealing.
Last month, stocks and gold fell together, which the report reads as cash-hungry investors selling what they could, not a judgment on gold itself. Demand tells a steadier story: jewelry spending hit a record in value even as volumes fell, industrial use held firm, and exchange-traded funds drew inflows in the third quarter. Central banks also added to their reserves.
Researcher Hong Seong-ki argued that the market already prices in another 0.5 to 0.75 percentage points of hikes, making the decline look excessive. He pointed to the 2022–2023 tightening, when gold stayed roughly flat while rates rose 5.25 points, and suggested that if hikes end in the first half of next year, now may be the best time to buy.
The report is candid about the risks. Persistent oil-driven inflation could force harsher tightening and push gold lower, while easing inflation could spark a quick rebound. For now, it points investors to two signals: whether central banks keep buying and whether ETF money keeps flowing in.
Spot gold, which traded above $5,000 an ounce in February, now sits around $4,000. That is a drop of roughly 20% from the peak, and it has prompted LS Securities to tell investors that the weakness is a chance to buy. In a report dated the 8th, the Korean brokerage said gold has entered its cheapest valuation range since 2022 and named November and December as an ideal buying window.
The path down was not a straight line. After the February high of more than $5,000 (about 6.8 million won), gold retreated to the $4,000 level, about 5.5 million won. In August it tried to recover and reached near $4,600, or about 6.3 million won. It has since slid back to around $4,000.
The report pins the main cause on a shift in expectations for U.S. monetary policy. Rising oil prices have revived worries about inflation, and the policy rate path priced in by the market has climbed by more than 1.5 percentage points since the start of the year. Long-term real interest rates have also risen, and the report attributes that to a steep climb in U.S. Treasury yields rather than to higher inflation expectations. Gold pays no interest or dividends, so higher real rates make it less attractive relative to other assets.
LS Securities also points to what happened last month, when stocks and gold both fell. Gold is a traditional safe haven, and its being sold alongside a wobbling stock market suggests that investors facing urgent needs for cash liquidated what they held. The report argues that this selling had nothing to do with fundamentals, that it widened the correction, and that it strengthens the case for buying at lower prices.
Demand data, according to the report, tell a different story from the price. Jewelry volumes fell because of the price burden, yet total spending on jewelry reached a record high. Industrial demand held steady regardless of price swings. Investment demand is split: purchases of physical bullion and gold coins have declined since the first quarter, while exchange-traded funds drew inflows in the third quarter. The report reads that as investors treating the decline as an opportunity. Central banks also added to their holdings in the third quarter, which it says helps support a price floor.
Researcher Hong Seong-ki made the central argument. Given that the market has priced in an additional 0.5 to 0.75 percentage points of U.S. rate hikes, he said, gold's decline already looks excessive. He cited the earlier tightening cycle, when the U.S. raised its policy rate by 5.25 percentage points between March 2022 and July 2023. The report says spot gold went from $1,980 to $1,960 an ounce over that stretch, roughly flat, which it presents as evidence that gold can hold up during tightening. The logic is that gold rebounds first once the market begins to price in the peak of rate hikes. Hong added that if hikes wrap up in the first half of next year, this year is the best time to buy.
The report acknowledges that variables remain. If oil-driven inflation lasts longer than expected, rate hikes could exceed what the market anticipates, and higher real rates could push gold down further. If inflation eases and expectations build that tightening is ending, gold could try to rebound quickly. The report names two indicators for the short term: whether central banks keep buying and whether ETF inflows continue.
Citazioni salienti
Judging by the 0.5 to 0.75 percentage points of additional hikes priced in, gold's decline is already excessive.— Hong Seong-ki, LS Securities researcher
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