Gold slid below $4,000 an ounce on Friday for the first time since July and headed for its steepest weekly drop in more than four months. Rising oil prices are fueling inflation worries, and the FT says gold is no longer functioning as a haven asset.
Gold dipped below $4,000 a troy ounce on Friday for the first time since July. Bullion fell as low as $3,986.50 before recovering some ground, according to the Financial Times.
Investing.com reported that spot gold had dipped 0.4% to $4,007.92 an ounce and was on track for a weekly decrease of more than 3.7%. Gold futures fell 0.9% to $4,022.10.
Oil climbs and inflation worries build
Brent crude touched $115 a barrel for the first time since May. Speculation over escalating tensions in the Middle East has fueled fears of renewed supply disruptions, the report said.
Higher oil threatens to exacerbate inflationary pressures ahead of a Federal Reserve meeting next week. The Fed is tipped to skip a hike at its October 27-28 meeting, but an increase in December is expected.
Higher rates can weigh on gold because they raise the opportunity cost of holding a non-yielding asset. ING analysts said the metal failed to benefit from a recent tech stock selloff and a move into U.S. Treasuries.
Gold stops acting as a haven
Berenberg analysts called gold's fall despite the risk-off backdrop a notable divergence. The FT noted that gold is often used as a haven investment.
Berenberg also said a confirmed close below $4,000 would likely trigger further ETF outflows and technical selling across gold equities. Gold mining stocks had their worst week in seven months, with BHP and Rio Tinto both falling more than 8%.
The pullback follows a record high of more than $5,400 a troy ounce in January, from which gold tumbled by more than a fifth. Still, central bank buying in September rose to its highest monthly level since November 2024, according to provisional World Gold Council data.
Sources: Investing.com, Financial Times
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