Every Tuesday afternoon we publish a collection of topics and give our expert opinion about the Equity Markets.

What a contrast one week makes to the next. Only last week we saw record highs vs the US$ and A$ but last Tuesday saw a significant pullback. Whether there will be further falls of any significance we shall see but let’s look at what happened and a few reasons why.

Less than a day after gold soared to another record high, prices for the precious metal plunged, marking the biggest sell-off in years. Social media and various news reports embellished the fall with words like “panic” and “savage.” Corrections can be sharp, especially when the run-up has been steep as in the case of gold. 

Gold futures in New York closed at a record $4,374 per troy ounce on Monday, before falling more than $250 (or 5.74%) last Tuesday. That’s the largest, single-day percentage drop seen since September 2011, according to data in FactSet. And, despite some brief rebounds, losses continued to pile up last Wednesday with gold futures trading at about $4,036.

This sharp decline was driven by a confluence of factors, including profit-taking after a prolonged rally, an easing of geopolitical tensions such as US-China trade relations, a strengthening US dollar, and technical signals indicating overbought conditions. In addition, expectations that the Federal Reserve will cut interest rates in the near term, with a 25-basis-point rate cut widely anticipated next week and possibly more before the end of the calendar year.

Despite this week’s losses, gold futures are still up 50% overall since the start of 2025. And silver has climbed even higher, up 60% year to date. These are significant rises relative to other investment classes.

Key factors that may influence future price movements include the following:

A delayed snapshot of US inflation in September came in softer than expected, potentially offering a path for the Federal Reserve to cut interest rates beyond this week’s meeting on the 29th. Markets have really built this in already, so the commentary about the number and timing of future cuts will be more important. Positive for gold if the Fed suggests more to follow in the short term.

The situation in Gaza and Ukraine is, of course, ongoing with a still tense situation in Gaza and seemingly little real progress between Trump and Putin. For either of these to flare up again would put a floor under gold. 

US Treasury Bonds are rising on easing U.S.-China trade concerns and Trump is currently in Asia meeting with President Xi, with discussions suggesting a trade deal and a possible delay in China’s rare earth restrictions plans. Negative for gold.

A further corrective decline cannot be ruled out and investors continue to take profits off their gold longs prior to the Fed’s two-day conference beginning tomorrow. 

Of course, there are many traders glued to their screens watching moving averages, which often determine the weight of trading and price direction. There is a key support level at $4,050, which is very close to being breached, so this level warrants close monitoring since the next critical support level is $3,920, the 200 Simple Moving Average (SMA).

But the most recent leg of the rally has been turbocharged by a wave of buying from ordinary “retail” investors, with gold shops running out of stock and more money piling into exchange-traded funds than ever before.

In Sydney, there were long queues at ABC Bullion prior to and during the recent frenzy. They would all have been buyers since buy/sell spreads on bullion and coins are fairly wide, so arbitrage in the short term is nigh on impossible.

Is “bargain hunting” succeeding? Will these current levels be breached to the downside? We take a look at previous “crashes” to see if they give us any insights or comparisons to the current situation.

When Gold Has Crashed Before

1980: The Blow-Off Top
In January 1980, gold reached $850, an all-time high at the time, amid rising inflation and geopolitical tensions, similar to today. However, when the Fed increased interest rates to over 15% to combat inflation, gold plummeted. By 1985, it was trading below $300, a decline of nearly 65%. The complete recovery took more than 25 years.

2011-2013: From Euphoria to Collapse
Gold peaked at nearly $1920 in 2011 following years of Fed money creation and concerns about sovereign debt, another similarity to today’s background. The Fed signalled plans to taper QE and the bull run reversed, with gold dropping to $1200 in just two years. 

2020-2021: Pandemic Spike and Fade
During the pandemic, gold soared to a then record of $2070. However, as vaccines became available, the economy recovered, bond yields increased and gold fell back to $1700, a drop of 18% in less than a year. 

It appears unlikely that price movements will match the extremes seen in the 1980s or 2011/2013.

Things are different today and there is more liquidity in prices and daily turnover (volume and value). The retail interest cannot be ignored, as well as the demand and supply factors, particularly new mining production vs long tail mining exploration. The 2025 production surge suggests that “peak gold” remains elusive, but warning signs abound: slowing discoveries, high environmental costs, and relentless demand. In this high-stakes balance, gold isn’t just a commodity; it’s a barometer for global stability. As prices soar toward new highs, one certainty endures: What nature forged over aeons, we may exhaust far sooner than we think.

The Global Gold Supply article is very interesting and worth reading.
Global Gold Supply: How Much Gold Is Left? (2025 Data)

As we go to print, gold has closed the NYK session at $3980, down just over 3%. The 200SMA isn’t far off at $3920, so if selling momentum continues, that might come into play and bear in mind that the major gold miners of the leading GDX gold stock ETF tend to amplify material gold moves by 2x to 3x.

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