Gold Is at a One-Year Low. What Has Actually Changed?

Jimmy Wong

Gold broke below US$4,000 an ounce on Friday and kept going. It ended the US session just under US$3,890, down about 3.4% on the day and at its lowest in a year. Silver fell harder, dropping below US$50 for the first time since November 2025. In Australian dollars, gold is about A$5,500 an ounce, down from roughly A$5,725 on Thursday.

Over October as a whole, gold lost 7.2% and silver 18.6%. It was gold's second losing month in a row, and leaves it about 30% below the record US$5,589 it set on 28 January.

Gold fell on the very day it is meant to protect you. American shares had their worst day since June. The Nasdaq fell 2.9%, the S&P 500 1.8%, and Intel dropped 29% — its worst day ever — after warning of far less revenue than investors had assumed. That is precisely the sort of day gold is held for. Instead it fell with everything else. If gold cannot protect on a day like that, what is it for?

Gold does two jobs, on two different clocks. Over days, it is simply something easy to sell — and easy-to-sell things get sold when people need cash in a hurry, to cover losses or because a lender wants more money put up against shares they borrowed to buy. Over years, it is a store of value that no government can print more of. This week those two jobs are easy to confuse. Friday was the short clock, which behaves like this whenever cash runs short. The long clock has nothing to do with Friday's price.

So what happened on the short clock? Two things. The prospect of higher interest rates had been pushing gold down all month: the Fed held on Wednesday but two of its twelve voters wanted a rise, and Thursday's growth and inflation figures came in hot enough to put roughly 80% odds on an increase at the 8–9 December meeting. Gold pays no interest, so when rates look like going up, holding it costs more. Gold was already down 7% from 19 October before Friday began.

Then Friday added the shove. Here is the giveaway: on Thursday US bond rates fell across the board, which normally helps gold, and gold fell anyway. On Friday it fell alongside shares rather than against them. That is people raising cash, not people changing their minds about gold.

And on the long clock? Nothing changed. China's central bank bought 23 tonnes in September, its biggest month in three years and its 23rd month in a row, lifting its holdings to 2,410 tonnes. Chinese households bought about 430 tonnes through the Shanghai exchange in a single week as the price fell. Governments still owe far more than they can comfortably repay. None of that moved because the price did.

But aren't investors selling? Some are, and it is worth looking at which ones. Gold funds had their first week of selling since July, losing a net US$1.21 billion in the week to 23 October and ending 13 straight weeks of buying. That reads like owners walking away — until you see the money left GLD, the big fund investors trade in and out of, while the cheaper funds people buy and hold took money in.

The futures market tells the same story. In the week to Tuesday, speculators cut their bets on a higher gold price by more than 13,000 contracts, and almost none switched to betting on a lower one. They are stepping aside, not turning against gold. That count stops on Tuesday, before the worst of the fall, so the fuller picture arrives next Friday.

And the price from here? Gold can be worth owning and still get cheaper. Look at what it did on the way up: it closed near US$3,870 on each of the first three days of October 2025, then US$3,948, US$3,977, and through US$4,000 on the 8th. Three days in that zone before it was gone. The price climbed so fast it left almost no trading behind it, and past trading is what slows a falling price down. The next place gold spent real time is the US$3,600s and US$3,700s of September 2025. Bank of America has floated US$3,750 as a possible low.

Set against that, gold finished Friday a little below where it stood a year ago. The whole of 2026 — up to US$5,589 in January, back down to here — has netted roughly nothing, while central banks kept buying and government debts kept growing. Whether that makes today's price cheap is a judgement each holder has to make, but value and timing rarely arrive together, and anyone buying into a market still looking for its floor is likely to be early for a while.

What about your ASX gold shares? The Australian gold index closed on Friday afternoon, hours before any of this happened. Monday morning is when it arrives — and the Reserve Bank decides on Tuesday, the same day as the US midterm elections.

Brian's own historical work says silver, not gold, is the better guide to ASX gold shares. Investors reach for gold first; money only travels on to the miners when people are willing to take more risk. Silver down 18.6% in a month, with the gold-to-silver ratio out to about 79 from 69 in early October, says that money has gone the other way. Expect the shares to move more than the metal did, and the explorers and developers to move more than the big producers.

What it does not mean is that these mines stop making money. At A$5,500 an ounce, set against September-quarter costs, Evolution keeps about A$3,850 an ounce, Ramelius A$2,840, Genesis A$2,530, Bellevue A$2,400 and Northern Star A$2,280. Even the dearest of them is a long way from trouble. The gold price is hurting how investors feel about these companies well before it hurts what they earn.

So what has actually changed? Of the three things we said we would watch, only the price has moved. Whether that means sitting tight depends on why the gold was bought in the first place, which is a question only you can answer. What we can say is that nothing explaining why gold is held moved this week. Selling a long-term protection because the short term turned uncomfortable is how holders have historically turned a bad month into a permanent loss. Committing everything at one level in a market still looking for its floor has cost people too. Spreading purchases across time and across levels is how we handle a stretch like this one.

What would genuinely change our mind is central banks stepping back. China's October figures are due around 7 November. That is the number to watch, and if it turns, we will say so here the week it happens.