Breaking: Gold Plunges 2.6% to 10-Week Low as AI Tech Selloff Hits Nasdaq

Gold prices fell sharply during the US session on Thursday, 22 Oct. Kitco reported spot gold at $4,034.76 an ounce, down 2.57%, after setting a fresh intraday low in the New York afternoon. FXStreet said prices touched $4,034, a 10-week low, before recovering slightly to around $4,047, while Reuters said gold fell about 2% to its lowest in more than 2 months.

The drop wiped out all of the gains gold had made since the summer and followed an earlier slide below $4,100 in the evening on news of a Houthi attack on Saudi Arabia (read yesterday’s breaking news)

Gold usually gets support when yields fall and geopolitical risk is high, but this time the opposite happened. Stocks were sold heavily on worries about whether massive AI spending will pay off, as well as credit risk at tech companies. Reuters reported the Nasdaq fell 2.6%, its biggest drop since 5 Jun, wiping out about $1 trillion in market value, while the Philadelphia Semiconductor Index slumped 6.7%. Stock markets in South Korea, Japan and China fell 3.5%, 2.5% and 2% respectively.

Money flowed into US Treasuries instead. US yields fell by up to about 20 bp across the curve, with the 10-year yield down 15 bp at 4.963%, the lowest since 23 Sep. FXStreet said higher energy prices from Middle East tensions led investors to prefer yielding bonds over non-yielding gold. Jesse Colombo, an independent analyst speaking to Kitco, called the move “very bizarre” because the dollar (DXY) barely moved, and said it may reflect technical selling, a broad global asset selloff and caution ahead of next week’s Fed meeting.

In the short term, FXStreet sees support at $4,000, followed by $3,996 (29 Jul low), $3,959 and $3,941, this year’s low, with resistance at $4,100 and $4,200. In currencies, the yen (USD/JPY) was the strongest G10 currency, falling to around 156.25, a roughly one-month low, after Japan’s September CPI rose 2.1% y/y. Some analysts suspect Japanese authorities may have intervened, but there has been no official confirmation.

Today (23 Oct) at 14:00 GMT the revised UMich consumer sentiment index is due (see the UMich preview), ahead of the Fed meeting on 27–28 Oct. FXStreet said markets price about an 8% chance of a Fed hike in October and close to 80% in December. Follow all release times on the economic calendar, the latest rates on the central bank rates page and this morning’s overview in Forex News 23 Oct