It was a terrible October for gold

Key points

• Pressured by inflation fears from rising energy prices, higher-for-longer interest rate expectations, and liquidity-driven risk-off sentiment, gold prices fell 3.65% last Friday to $3,875 per ounce, hitting a one-year low.
• Historical data indicates that when gold hits a one-year low, it typically faces further downside risk in the short term, exhibiting a win rate of only 35% and a -0.8% median return over a two-month timeframe.
• The sharp price decline dragged the Gold Optix sentiment indicator below 50; historically, one month after this signal triggers for the first time in a year, the win rate is a mere 41%, though gold's core value as a safe-haven asset remains intact for the long term.

It was a terrible October for gold

Gold prices fell 3.65% last Friday to close at $3,875 per ounce. Rising energy prices and lingering inflation fears have intensified market expectations that US interest rates will remain elevated for longer, hurting the precious metals market. Additionally, a liquidity-driven risk-off environment has forced investors to liquidate safe-haven assets like gold to raise cash, placing heavy downward pressure on prices. 

The latest round of declines marks the second consecutive month of falling gold prices, dropping to its lowest point in a year.