(Bloomberg) -- Gold steadied near its lowest close in more than three months as investors sold the precious metal in a cross-market stock rout.
Bullion was trading at around $4,025 an ounce after falling almost 3% in the previous session to its lowest since July 20. US stocks fell on Thursday and Treasury yields tumbled by as much as 20 basis points on some maturities, the most since August 2025, as anxious traders hedged their bets by flocking to bonds.
Gold had likely faced a “liquidity-driven selloff,” said Justin Lin, an analyst at Global X ETFs. This “tends to happen in sharp market downturns, as it’s a great source of liquidity to fund margin calls, capital requirements,” he said, adding the precious metal was close to testing a critical level of $3,900 an ounce.
Still, the tempering of expectations for more rate hikes by the Federal Reserve should offer some support to gold in the near term. Investors are increasingly worried about the sustainability of artificial intelligence investment — a major driver of US growth. This is prompting traders to lower their bets for another increase with the probability of a quarter-point hike at the Fed’s meeting next week currently sitting below 10%.
“A V-shape recovery is likely” for gold despite the near-term downward pressures, Lin said, adding that lower rates, faltering AI trade and capital outflows from the US pushing the dollar lower are all positives for precious metals.