Gold (XAU) Has Lost About 25% Since the US-Iran War Began

Rates and the Wartime Slide

The Federal Reserve raised interest rates in September, and markets now attach roughly an 80% probability to another hike in December, the policy backdrop against which gold has given up about 25% of its value since the United States and Iran went to war. Prices briefly touched $3,975 an ounce on Friday before recovering to roughly $4,020 on Monday, and the bounce has so far held into Tuesday. That leaves the metal down close to a quarter since the conflict began, one of the sharpest drawdowns among major assets this quarter. The mechanics of the slide are not complicated. Surging oil prices have revived inflation fears and made further US rate increases more likely, and a rising rate path makes interest-bearing bonds more attractive than an asset that pays no yield. A technology-stock selloff last week added pressure as portfolio managers sold liquid holdings to raise cash. Positioning records point in the same direction. Commodity Futures Trading Commission data show money managers steadily trimming bullish gold futures exposure, down to a net 104,206 contracts on October 20, which reads as leveraged money cutting risk rather than a structural exit; a reversal in that book would count more than any single daily close. The stress has spread past the metal itself: about 92% of the stocks in the gold miners ETF (GDX) now trade below their 50-day moving average, the highest proportion since late July, a share that climbed 80 percentage points in just 21 sessions, according to a market analysis posted October 25. What the tape does not yet show is capitulation. Long-term buyers absorbed supply through most of the decline, and the split between who is selling and who is still buying has become the central question heading into a week that carries both a Fed decision and a US inflation print.

@KobeissiLetter · X post

Market analysis posted October 25.

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COINOTAG data for Gold (XAU) put the metal at $4,025.59, up 0.76% over 24 hours within a $3,990.67 to $4,038.20 range. The daily trend reading is a downtrend, the 14-day relative strength index sits at 34.9 and the MACD signal is bearish, a picture of a market that has sold off hard without a full flush. The nearest support is $3,996.72, which COINOTAG's composite scores 96 out of 100 and marks with a Fibonacci retracement floor; Friday's low of $3,975 sits just beneath it. First resistance waits at $4,071.84, scored 83/100. Leveraged positioning has not fully unwound either, with perpetual open interest still near $933.9 million.

Record Inflows Meet the First Weekly Drop

Flows into gold ETFs tell the opposite story. The World Gold Council's latest holdings report shows gold ETFs attracted a record $31 billion in the third quarter, and holdings climbed 67 tonnes in September alone even as prices fell. Physical-gold ETFs tracked by Bloomberg have now recorded 14 consecutive weeks of inflows, lifting total holdings to nearly 102 million troy ounces, their highest level since mid-2022, according to a breakdown posted October 26. ETF holdings are the cleanest public proxy for Western investment demand, and the third-quarter record shows that proxy rising straight through a 25% price drawdown. The divergence suggests longer-term investors kept accumulating while speculative traders cut exposure, and for most of the war that cushion worked: fresh fund demand softened each leg lower. It is thinning now. Global ETF holdings fell roughly 6.8 tonnes in the week of October 19, the first weekly decline since July, according to holdings tracker BoldETF. The largest US gold fund, SPDR Gold Shares (GLD), shed $2.3 billion over five days, although several smaller gold ETFs took in money over the same stretch, a sign the pullback is concentrated among the biggest vehicles rather than universal. Weekly outflows of that size remain small next to September's 67-tonne build, but the direction matters more than the size. StoneX strategist Bob Haberkorn expects gold to “hang around the $4,000 level into the Fed announcement.” Wednesday's Federal Reserve decision and Thursday's US inflation report will test that call: sustained fund demand and a softer rate path could support a recovery, while continued outflows and stubborn inflation would leave the metal open to another leg down.

@GlobalMktObserv · X post

Breakdown posted October 26.

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