Gold has found a floor near 4,000 dollars an ounce, but it is no longer behaving like the asset investors once reached for in a crisis. A Reuters analysis published on 8 November argues that the metal has largely lost its traditional role as a hedge against inflation and geopolitical turmoil, and that speculative trading now drives its price more than fear does.

The spot price ended at 4,065.63 dollars an ounce on Friday 6 November, having recovered from its low so far this year of 3,869.85 dollars on 30 October. Gold dipped below 4,000 dollars on several occasions in July and came back, and it came close again in March, slipping to 4,097.99 dollars on 23 March as it corrected after reaching a record high of 5,594.82 dollars on 29 January.

The scale of the fall from that record is striking. Spot gold traded near 4,050 dollars on 6 November, roughly 28 percent below the late January record, after gaining 64 percent in 2025, its strongest calendar year since 1979. A drop of that size would normally suggest a bull market has ended, yet the metal has held above the 4,000 dollar level that traders now watch as support.

Reuters puts the change down to how gold is traded. Much of the commentary this year has focused on the metal appearing to have lost its hedge role, with speculative trading taking a larger share of the market. Some of the froth and hot money has been washed out in recent months as gold flirted with a break below 4,000 dollars, but the short-term outlook remains cloudy and vulnerable to swings in either direction.

The main short-term risk now comes from equities. Investors have questioned the artificial intelligence investment boom, especially after the Democrats won both houses of Congress in the US midterm elections, with many of the winners questioning the need to build more energy-hungry data centres. When shares fall sharply, investors often have to sell other assets to raise cash, and selling gold fits a historical pattern when stock markets correct.

That link cuts both ways. Short-term equity weakness may turn into a medium-term positive for gold, especially if weakness extends into the real economy. The recent drop in crude oil prices, driven by renewed hopes for an end to the Iran conflict, is also likely to shift expectations on US monetary policy back towards neutral, and possibly even towards rate cuts next year.

Part of the reason gold has struggled since its January record is the shift in US rate expectations towards likely higher interest rates. Higher real yields raise the cost of holding an asset that pays no income, and a stronger dollar makes bullion dearer for buyers outside the United States. Crowded positioning in call options magnified the unwind once selling began.

The longer-term picture looks different. Central banks bought 321.2 metric tons of gold in the third quarter, up from 296.3 tons in the previous quarter and the most since the last three months of 2024, according to World Gold Council figures. Demand was price sensitive: the weakest quarter this year was the first, when demand was just 57.7 tons as the price hit its record high. The recent drop below 4,000 dollars is likely to encourage central bank buying in the current quarter.

Investors are also returning. Council data shows inflows of 19 tons in October into exchange-traded funds, adding to the 211.2 tons seen in the third quarter, which reversed a decline of 47.3 tons in the second.

Jewellery demand provides a third leg. China and India together account for almost two-thirds of global jewellery demand, and lower prices in recent months are likely to boost buying. India's jewellery demand was 99.9 tons in the third quarter, the most since the fourth quarter of last year, while China's rose to 71.9 tons from 55.7 tons in the second quarter.

None of this makes 4,000 dollars a guaranteed floor. That level is a view held by some market watchers rather than a fact. A sustained rise in real yields, a stronger dollar, or further central bank selling could still push gold below it, and miners would fall harder than bullion in that case because their costs stay fixed while revenue drops.

For now, gold sits in short-term limbo, caught between competing influences. Its price moves with equities, crude oil and rate expectations from day to day, while the longer-term case for holding it rests on diversification, central bank buying and jewellery demand in India and China. The next tests are the US inflation figures due on Tuesday and the path of Federal Reserve policy that follows them.