Spot gold has broken below the $4,000 level—why has the safe-haven logic failed? Is this level suitable for buying?

Roland Lescure, France’s Minister of the Economy and Finance, stated publicly on October 1: “Although yields are higher than a year ago, French government bond sales remain robust, and France’s creditworthiness remains solid.” On the 14th, Valdis Dombrovskis, European Commission Commissioner for Economic Affairs, remarked: “There are currently no signs of a new eurozone sovereign debt crisis.” French debt dynamics are cyclical: politicians dare neither raise taxes nor cut welfare, postponing concessions until bond markets erupt—only to reverse course once markets calm down, repeating the cycle. The surge in French bond yields has raised the opportunity cost of holding gold, constituting the most direct pressure on gold prices in this round. Second, the Middle East conflict is escalating, pushing oil prices toward $120. On October 20, Brent crude hit a high of $111 per barrel—the highest since May 20—registering over a 10% monthly gain; WTI briefly breached $100. Over the past two weeks, at least 18 commercial vessel attacks have occurred in the Strait of Hormuz—a critical maritime chokepoint handling roughly one-fifth of global seaborne oil exports—keeping tensions persistently high. The Houthi movement has launched strikes against multiple targets, including Saudi Aramco’s oil facilities and Dammam’s civilian airport. The U.S. is deploying its third aircraft carrier strike group to the Middle East and coordinating with Israel on a new round of military strikes targeting Iran. Zhu Meixia of Shandong Gold Futures offered a clear assessment: “Oil prices possess near-term momentum to challenge the $120-per-barrel level.” Yang An of Haitong Futures likewise cautioned that the current supply structure is extremely fragile; any escalation in hostilities could trigger renewed supply disruptions. Oil exerts downward pressure on gold via two channels: (1) the inflation channel—rising oil prices lift inflation expectations, prompting the Fed to maintain high interest rates, elevating real interest rates and thus increasing the opportunity cost of holding non-yielding gold; and (2) the liquidity channel—energy crises and fears of economic hard landing compel investors to seek cash, forcing them to sell gold to raise liquidity. Wang Shenghao of Zhongzhou Futures told China Times bluntly: “Rising oil prices directly reignite inflation-rebound expectations, prompting markets to reprice the duration of the Fed’s tight monetary policy—and as a non-yielding asset, gold’s holding cost rises accordingly.” Yet, Deng Zhijian of DBS Bank added a crucial counterpoint to China News Service: “Interest rate hikes elsewhere may outpace those in the U.S. in both frequency and magnitude, keeping the U.S. dollar relatively weak—which, conversely, supports gold prices.” Third—and most covert yet lethal—is the confluence of liquidity drought and an AI market collapse. This factor is widely overlooked, yet I believe it is the true reason behind gold’s simultaneous decline with U.S. equities. As of market close on October 16, NVIDIA had retreated 12.02% from its all-time high reached on October 6—erasing approximately $600 billion in market value over nine trading days, dropping from $5.76 trillion to $5.16 trillion. The Philadelphia Semiconductor Index has declined for eight consecutive trading days—the longest such streak since 2008—with a cumulative seven-day drop exceeding 12%. Among the world’s top 20 AI- and semiconductor-related firms, total market capitalization shrank by roughly $1 trillion across just four trading days—from October 12 to 15. Xu Yaxin, researcher at Beijing Gold Economic Development Research Center, cited the same data to both China News Service and China Times: “Over the past 13 trading days, the Philadelphia Semiconductor Index has plunged 20% from its peak to its trough.” This has triggered systemic concerns about an AI bubble bursting. OpenAI’s revenue figures have further intensified anxiety: the Financial Times reported its annualized revenue run-rate stands near $50 billion—below earlier rumors of $68–70 billion.

Will the Federal Reserve raise interest rates again in December?

Federal Reserve Governor Christopher Waller dropped the most hawkish statement yet—what can only be described as an outright 'hawkish bomb.' Nasdaq futures and gold tumbled simultaneously, with gold breaking below $4,100. Waller declared: “I support a rate hike in December—and it could exceed 25 basis points; if necessary, we could go straight to 50.” His rationale was straightforward: inflation remains too high, September’s data were abysmal, and price increases are broadening across the economy. Most critically, he added: “Raising rates by only 25 basis points would risk our credibility.” In plain language—that means the Fed would rather double the hike size than lose face. This isn’t about fighting inflation anymore—it’s about saving face. He added an even sharper remark: “We won’t hike by 150 or 200 basis points—we’ll simply reverse the three preemptive cuts made earlier.” Did you catch that? Those three prior rate cuts are now being fully unwound—principal plus interest. Markets reacted instantly with panic: the probability of a December rate hike surged above 99%. ………… NVIDIA’s pre-market trading first rose 2%, then turned negative—this ‘gap-up and fall’ pattern is more telling than a straight decline. Other AI stocks have recently rebounded—but NVIDIA alone continues to bleed.