Gold and stocks falling together is 'very reminiscent of 2008,' says analyst
Gold prices sank to their lowest price in over a year on Friday.
The plunge in safe-haven gold to its lowest price in a year on Friday seems to fly in the face of jitters around the potential for fresh turmoil in the Middle East following the U.S. midterm elections on Tuesday.
Investors, in the recent past, reliably flocked to the safety of gold, Treasurys and the U.S. dollar when regional conflict or war between nations looked imminent, or likely to intensify. But in President Donald Trump's second term, many of the traditional safe-haven moves have been turned on their head.
The tech-heavy gains driving the four-year bull run in U.S. stocks - and any sharp reversals - also now appear to be shaking things up following previous flight-to-safety playbooks.
A sharp selloff in equities through Friday has "created collateral damage in the precious-metals markets due to a liquidity-driven flight to safety," said Dana Samuelson, president of American Gold Exchange. In other words, investors hit by losses in the stock market were scrambling for cash, and found some by selling gold.
Gold prices settled Friday at $3,898.90 an ounce on Comex, with the most-active December contract (GCZ26) (GC00) down 3.3% for the session, according to Dow Jones Market Data. They tallied a loss of 10% for the month of October. That was the lowest settlement price since Oct. 2, 2025.
An equity selloff coincided with an already "weak and vulnerable" gold market that was hovering just above its major July support level of $3,975, said Samuelson. Once gold broke that support technical, that exacerbated its decline, he said.
Benchmark U.S. stock indexes traded broadly lower Friday, with the Dow Jones Industrial Average DJIA ending 1.1% lower, the S&P 500 SPX tumbling 1.8% and the Nasdaq Composite Index COMP bearing the worst of it, with a 2.9% plunge.
"When equity markets drop hard, people look for liquidity," said Michael Armbruster, co-founder and managing partner at futures brokerage Altavest.
Markets across the board, however, seem to be "front-running growing concerns that there could be major and destabilizing military escalations in the Persian Gulf as early as next week," said American Gold Exchange's Samuelson.
Indeed, recent comments from Trump warrant concern. In a social-media post earlier this month, he ruled out U.S. military action against Iran ahead of the U.S. election on Nov. 3, but news reports indicate potential major strike plans have been drawn up.
Despite the high risks of escalation in the Middle East and a resumption of a regional war in the near future, gold has seen persistent pressure and it's had a difficult time sustaining a broader recovery, said Samer Hasn, senior market analyst at XS.com.
That's because a deteriorating situation in the region, along with resilience in the U.S. economy, may mean the Federal Reserve will keep a higher-for-longer interest-rate policy and keep Treasury yields elevated - preventing gold from recovering sustainably, he said in Friday commentary.
Meanwhile, "growth fears are the new news in the wake of in-line tech earnings and the selloff gaining some momentum across the AI sector," said Rob Haworth, senior investment strategist at U.S. Bank Asset Management.
Should the selloff in AI intensify, especially if the election indicates opposition to data-center build-outs, gold may find some support, he said.
Longer term, Altavest's Armbruster suggested that gold prices could be headed higher, particularly if the Federal Reserve leans toward rate cuts in 2027.
The situation with gold and the stock market falling together is very reminiscent of 2008, he said. That year, gold bottomed by October and gold prices then climbed by more than 250% over the next three years, he said.
It is going to take a lot of money-printing to continue to finance the U.S. debt, Armbruster said. In the longer run, that is "extremely bullish for gold," he said, adding that Altavest has advised gold bugs "to keep their powder dry until year end."
"Do not buy this dip, yet," he said.
-Myra P. Saefong
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