Spot gold lost 3.62% in a single Friday session and closed around $3,875 per ounce. This happened on October 30. Over the week, the metal gave up 3.74%.
The spot price is the cost of metal for immediate delivery, not under a futures contract. From the August level of roughly $4,700, gold is now 18% lower.
Why this matters to a trader. A 3.6% move in a day is a big rarity for gold. For six months the metal was considered a calm asset, and in one session that reputation changed.
What did the week's numbers show?
The weekly range was from $4,082.50 to $3,870.25. Closing prices across different data providers almost coincided.
- $3,875.05 - closing price per Kitco
- $3,875.55 - closing price per Investing.com
- $3,875.84 - closing price per Trading Economics
Trading opens on Sunday evening.
Why did gold fall?
For most of the week the metal did not hold above the round $4,000 mark. On Friday it broke through $3,900 as well.
Commerzbank calls Friday's drop in precious metals excessive. The bank attributes it to margin-call selling after the collapse in tech stocks.
A margin call is a forced closure of a position due to insufficient collateral. Closing losses in one place, money was pulled out of where there was profit.
Key point: gold pays no interest, so it is most sensitive to the rate and to strong data. On October 28 the Fed left the range at 3.75-4.00%, with two committee members voting for a hike.
What is the market expecting?
Expectations diverged. Kitco's October 30 survey involved 16 analysts.
- 10 analysts (63%) expect a decline this week.
- Five bet on a sideways move.
- One expects a rise.
- 98 of 184 private participants (53%) expect a rise.
The week's discussed reference levels: $3,750 below and $4,000 above.
What happens next?
The week is packed with data. The schedule of events is in the economic calendar.
- Monday - ISM manufacturing index
- Tuesday - JOLTS and US midterm elections
- Wednesday - ADP and ISM services
- Thursday - Bank of England meeting
- Friday, November 6 - October employment report
The nearest point of attention is last week's low of $3,870.25. Today OPEC+ also meets with Brent around $113.
Were you holding gold on Friday evening?
Minus 3.6% in a session on a metal that was considered a quiet story for six months. This is the day when the account gets rewritten in both directions. Then the boring arithmetic kicks in: the same candle on a deposit of a couple thousand gives change, while on a hundred-thousand notional it's a closed month. Prop trading is access to exactly that kind of notional: the company gives you a trading account, you pay for the selection and work within its risk limits. There are still five days until Friday's employment data - enough to understand the mechanics without rushing.