Gold Price Crashed 25%, but Investors Still Buy

What happened

Gold has lost nearly a quarter of its value since the US-Iran war began, briefly falling to $3,975 an ounce on Friday before recovering to around $4,020 on Monday. Despite the decline, investors kept buying gold ETFs, which are funds that hold gold.

Confirmed

Global impact / market context

Steady ETF buying shows some investors treated the fall as a chance to buy rather than a reason to exit. Because ETFs hold physical gold, their flows can influence demand and prices, making the gap between weak prices and strong buying important for investors.

Analyst inference

Higher oil prices and expectations of rate hikes, which mean higher borrowing costs, have pressured gold, since bullion pays no interest. The World Gold Council reported a record $31 billion of ETF inflows in the third quarter, yet global holdings slipped recently, so buying has not been uniform.

Analyst inference

What to watch

1. The $4,000 an ounce level is a near-term test, along with Wednesday's Fed decision and Thursday's US inflation report, which could shift expectations for interest rates and demand for gold. Confirmed
2. Watch whether ETF inflows persist or reverse after these tests. Sustained buying could support prices, while a switch to selling, as seen when GLD lost $2.3 billion over five days, could add pressure. Proposed
3. Because gold pays no interest, higher oil prices and rate-hike expectations raise the cost of holding it, so any inflation data or Fed signals that change rate expectations could quickly move gold and ETF flows. Analyst inference

Evidence

• binance.com