(Kitco News) - The gold market is once again testing resistance near $4,100 an ounce as investment demand continues to support elevated prices; however, one market strategist says that further volatility in equity markets and cryptocurrencies could pose a downside risk to the precious metal.
Although gold is down about 6% from last month’s all-time highs near $4,360 an ounce, its selloff has been less dramatic than Bitcoin’s. The digital currency, testing support at $85,000 per token, is down 31% from its highs.
“Gold is not necessarily set to benefit from equity markets under pressure amid a tech-led dip or cryptocurrency weakness,” said Suki Cooper, Global Head of Commodities Research at Standard Chartered, in her latest note. “Margin calls could pressure gold in the short if equity markets remain under pressure.”
Gold is also struggling to attract new bullish momentum due to growing market uncertainty around the Federal Reserve’s monetary policy. Cooper explained that Standard Chartered expects the central bank to leave interest rates unchanged next month.
“The Fed minutes reflect a heavy reluctance to cut, and the November employment data has been delayed to after the meeting,” she said.
Although gold’s downside potential is growing, Cooper also noted that risks are limited as investment demand remains robust and broad-based. Gold’s push to record highs in October was driven by unprecedented demand for gold-backed exchange-traded products (ETPs). While ETP inflows have slowed, Cooper noted that the physical market has not weakened as much as might have been expected given record prices.
At the same time, Cooper said that the universe of gold investors has expanded, showing solid potential for future demand.
“Established holders of gold had started to scale back exposure after the global pandemic in Q2-2021, suggesting that ETP flows would become more nimble,” she said. “This time around, established ETP holders – including pension funds – continued to increase their gold exposure in Q3-2025, but positioning is below the peak. Importantly, the ‘investment advisor’ category, which includes some family offices, continued to grow in Q3. The new exposure resilience has not yet been tested, but anecdotally, it appears that many new investors are still under-allocated compared to target allocations.
Cooper also said that trade flows indicate that investors are becoming more comfortable with gold prices above $4,000 an ounce.
“Short interest in the largest gold ETP fell sharply (by 36%) in the last two weeks of October, compared with mid-October, to levels last seen in February. Short interest eased as prices dipped from record highs, suggesting that markets have become increasingly comfortable with prices consolidating within their recent range,” she said. “One-month implied volatility remains choppy and while it has eased from the recent spike, it continues to trade near April levels. Meanwhile, one-month risk reversals have also eased from the highest levels since June, but are still firmly in favour of calls.”
