Gold Falls Below $4,000 for the First Time Since July. What’s Next?

Gold fell below $4,000 an ounce on Friday for the first time since July, reaching a low of $3,986.85. The breach tested Morgan Stanley analyst Amy Gower’s view earlier this month that $4,000 was a floor, based on central bank buying, lower bond yields and cheaper oil; central banks kept buying, with Goldman Sachs estimating 79 tonnes in August and provisional World Gold Council data putting September buying near 63 tonnes so far. Justin Lin of Global X ETFs described a liquidity-driven selloff in which investors sell gold to cover margin calls and identified $3,900 as the next test. Bank of America has flagged a possible $3,750 low. The Fed meets on October 27 and 28.