Readers may recall that in my post titled “Warning
for Gold Investors” dated September 30, 2025 I had informed the investors
taking significant position not to panic, but keep close watch on the commodity
market, especially gold. By that time the precious metal had rallied more
than 10% this month, but took a breather after reaching another record
early Tuesday, last trading day of the month. The prospect of
an imminent United States government shutdown added to the metal’s
appeal as a safe haven investment.
Gold’s dramatic fall has exposed the fragile foundations
beneath its record-breaking rally. The message is clear: even gold, long
considered a bastion of stability, is not immune to engineered market forces.
One cannot ignore the role of central banks in this saga. In
recent months, major central banks ramped up gold purchases aggressively,
creating artificial demand and fueling a meteoric rise in prices. While
presented as prudent diversification and a hedge against inflation, these
purchases effectively inflated a bubble, enticing private investors to chase
gains without understanding the underlying dynamics.
Profit-taking by investors was inevitable once the price
peaked. The frenzy generated by central banks had drawn private money into the
market, but when the momentum stalled, those same investors rushed to lock in
gains, triggering the sharp correction.
Compounding the drop, the US dollar strengthened, making
gold more expensive for international buyers. Meanwhile, geopolitical
tensions—the usual excuse for gold’s safe-haven appeal—have eased, and seasonal
demand from India’s post-Diwali slowdown further weighed on the market.
Analysts also note that prices had become technically overbought; the
correction was overdue.
This episode exposes a fundamental truth - gold’s recent
highs were less about organic demand and more about engineered interventions.
Central banks, in effect, played puppeteer, manipulating sentiment while
ordinary investors bore the brunt of volatility.
Despite the fall, gold remains up roughly 60% for the year.
The long-term narrative of gold as a hedge against uncertainty remains, but
this correction is a warning - markets can be steered to extremes by
institutional players, and what shines today may be a bubble tomorrow.
Investors chasing gold’s glitter must remember—it is not immune to human
engineering.
