{"id":94687,"date":"2025-10-22T17:23:08","date_gmt":"2025-10-22T17:23:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/94687\/"},"modified":"2025-10-22T17:23:08","modified_gmt":"2025-10-22T17:23:08","slug":"from-fomo-to-fear-of-margin-calls-golds-wild-ride-enters-new-stage","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/94687\/","title":{"rendered":"From FOMO to fear of margin calls: gold’s wild ride enters new stage"},"content":{"rendered":"

Stock image. <\/p>\n

Gold\u2019s remarkable rise has moved into a new phase with the swelling influence of speculators bringing greater volatility yet market players are sticking with forecasts for higher prices in 2026 even if central bank demand eases.<\/p>\n

On track for its biggest yearly rise since 1979, gold\u2019s 54% rise year to date has seen it break through key psychological resistance levels at $3,000 per ounce in March<\/a> and $4,000 in October<\/a>.<\/p>\n

Powering the run have been political tensions and US tariff uncertainty and more recently a wave of fear-of-missing-out (FOMO) buying.<\/p>\n

\u201cThe nature of the rally has changed, driven now by Western investors rather than the stickier emerging market buyers of most of the last two years,\u201d said John Reade, senior market strategist at the World Gold Council.<\/p>\n

\u201cThis means more uncertainty and volatility even if the factors driving gold look set to continue,\u201d he added.<\/p>\n

On Monday, gold hit a record $4,381 an ounce<\/a>, a level few had predicted a year ago or expected to see any time in their lifetimes.<\/p>\n

Delegates heading to the London Bullion Market Association (LBMA) conference in Japan next week had forecast a year ago a price of $2,941 by this point.<\/p>\n

Having achieved so many major milestones, bullion saw a 5% sell-off on Tuesday<\/a> in the steepest daily fall for five years, driving the market\u2019s relative strength index, which measures the magnitude of price changes, to \u201cnormal\u201d from \u201coverbought\u201d for the first time in seven weeks.<\/p>\n

\u201cA consolidation would in fact not be unusual after such a sharp and steep rally and should be considered healthy,\u201d said Julius Baer analyst Carsten Menke. \u201cThe fundamental backdrop for gold remains favourable.\u201d<\/p>\n

US rate cuts and stocks<\/p>\n

Gold\u2019s record high on Monday took it up 20% since rate cuts by the US Federal Reserve in September.<\/p>\n

That outpaced bullion\u2019s performance versus most recent Fed easing cycles, according to analysts at Oxford Economics.<\/p>\n

\u201cIn previous cycles the Fed was not cutting interest rates at all-time highs in US stocks, with bubble talk in markets and inflation still convincingly above their target,\u201d said Nicky Shiels, head of metals strategy at MKS PAMP.<\/p>\n

\u201cSeems like this \u2018everything bubble\u2019 has room to run, and gold prices through $4,500 will only sustain the FOMO buying in retail.\u201d<\/p>\n

Gold prices have increased twofold in the past two years, having surpassed the 1980 inflation-adjusted high calculated by MKS PAMP at $3,590 (nominal high of $850 then).<\/p>\n

A wary eye on rising S&P 500<\/p>\n

Market specialists are keeping a wary eye on a rising S&P 500\u00a0stock index and a simultaneous inflow of investor cash into bullion, mindful of historical cases when sharp corrections in equity markets forced the sale of safe haven assets, including gold.<\/p>\n

\u201cA portion of gold purchases have been made as a hedge against equity market declines,\u201d HSBC analyst James Steel said in a recent note.<\/p>\n

\u201cA correction in equities could, as they have in the past, trigger long liquidation as investors seek to raise cash or meet margin calls.\u201d<\/p>\n

Central banks, institutional investors<\/p>\n

With exponential gains over the past month, emerging market central banks don\u2019t have to do much to keep progressing their common aim \u2013 increasing the share of gold in their foreign currency reserves for diversification.<\/p>\n

\"ShareShare of gold in central bank reserves<\/p>\n

Although central bank buying is widely expected to remain elevated for years, having supported demand for bullion since late 2022, the price rally automatically increases the value of their holdings.<\/p>\n

\u201cThat thinking also applies to long-term institutional investors who are perhaps hitting portfolio thresholds and need to de-risk and reduce their gold holdings,\u201d Shiels said.<\/p>\n

Analysts also caution that if investor momentum slows in 2026, excess physical supply could begin to weigh on prices as demand from the jewellery sector in the key consuming regions is falling.<\/p>\n

China\u2019s January-September gold imports fell 26% in tonnage terms, according to the Trade Data Monitor. India\u2019s January-July imports fell 25%.<\/p>\n

(By Polina Devitt; Editing by Veronica Brown aned Jason Neely)<\/p>\n","protected":false},"excerpt":{"rendered":"Stock image. Gold\u2019s remarkable rise has moved into a new phase with the swelling influence of speculators bringing…\n","protected":false},"author":2,"featured_media":94688,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[138,220,111,139,69],"class_list":["post-94687","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-markets","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/94687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=94687"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/94687\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/94688"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=94687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=94687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=94687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}