Gold climbs above $3,900 as bargain hunters return after October rout

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Gold climbs above $3,900

Highlights

Spot gold rose 0.56% after steep losses.
Gold futures gained 0.19% on Monday.
Dip buying supports a fragile recovery.

Spot gold climbed 0.56% to $3,897.48, while December 2026 gold futures rose 0.19% to $3,906.35. Bloomberg reported that bargain hunting and falling oil prices supported bullion as expectations of additional US strikes on Iran eased, reducing concerns about another surge in energy-driven inflation.

Gold recovers as buyers return after steep losses

Monday's advance followed a 3.7% plunge on Friday that pushed bullion to its lowest level in a year and completed its worst October since 2008. Gold briefly gained as much as 1.1% during Asian trading, suggesting that some investors considered the recent decline an opportunity to rebuild positions.

The improvement coincided with reports that President Donald Trump wanted to give negotiations with Iran more time before deciding whether to resume military strikes after the November 3 US midterm elections. Lower energy prices eased immediate inflation concerns, potentially reducing pressure on central banks to maintain restrictive monetary policies.

Nevertheless, uncertainty surrounding the Middle East remains a significant influence on bullion. Iran has threatened broader retaliation if US-Israeli attacks resume, while Gulf governments have warned that another confrontation could cause extensive economic damage. A renewed escalation could revive demand for gold as a defensive asset, although higher inflation and interest-rate expectations could limit those gains.

Technology selloff and ETF holdings remain a concern

Gold's recent weakness has also been driven by financial-market pressures unrelated to its traditional role as a safe haven. A sharp decline in technology stocks, particularly companies linked to artificial intelligence, prompted some investors to sell precious metals to cover losses and raise liquidity.

Selling pressure eased during Monday's Asian session as regional equities stabilized and US stock futures recovered. However, gold-backed exchange-traded funds remain vulnerable after investors added nearly 150 metric tons to their holdings since mid-July. Much of that accumulation is now showing losses following bullion's retreat below $4,000.

Analysts at Global X ETFs see potential support from long-term investors and central banks seeking lower entry prices. Saxo Bank has cautioned that technical selling remains a risk after Friday's close below $3,886, while a sustained recovery above $4,000 could help restore confidence.

Gold faces a critical test of investor confidence

The rebound has yet to reverse the damage from October's decline. Although both spot gold and December futures recorded gains on Monday, prices remain below the $4,000 threshold that investors are watching for signs of a more durable recovery.

The next direction will depend partly on whether ETF liquidations slow and whether global equities stabilize. Developments in US-Iran negotiations could also influence inflation expectations and demand for defensive investments. Without an improvement in those conditions, bargain buying alone may struggle to sustain the recovery.

Earlier, we reported that African central banks expand gold reserves as shift from the U.S. dollar gains pace.

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