Gold's 1.8% Bounce Meets a Divided Market: Futures Traders Retreat, Fund Holders Hold Firm

Gold snapped back on Monday, with the metal gaining 1.8% to settle at $3,945.67 an ounce as diplomatic signals between Washington and Tehran knocked crude prices lower and took some of the edge off inflation worries. Yet the single-session rally sits atop a market that has been quietly splitting in two — and the data behind the split suggests the recovery has yet to prove itself.

The softer oil price is the immediate catalyst. Reuters reported that diplomatic talks between Iran and Qatar weighed on crude quotations, easing the inflation and rate concerns that had hammered the metal. Iran floated a possible reopening of the Strait of Hormuz and a resumption of nuclear negotiations, though only under conditions Washington has not accepted. The tailwind, in other words, rests on political developments whose outcome remains unresolved.

A Split Between Leveraged Sellers and Steady Funds

The World Gold Council's weekly report, published today, attributes the recent selloff chiefly to shifting US rate expectations and selling by leveraged investors. Positions held by professional money managers have fallen by roughly 11 tonnes since mid-October, the council said. Other reportable and non-reportable positions, along with spread-related holdings, dropped by about 70 tonnes over the same stretch. The organization also points to a rotation into bonds.

That distinction matters. Trimming leveraged exposure is not the same as a broad retreat by long-term holders. The council describes weaker US demand alongside a more optimistic stance among committed fund investors — a divergence echoed by Saxo's analysts, who note that gold funds saw outflows of about 6 tonnes last week but have still taken in roughly 150 tonnes since July. Hedge funds, by contrast, have sold gold futures for nine consecutive weeks.

Speculative net long positions stood at 107,000 contracts before the latest wave of selling, according to Saxo — still 15,000 contracts above the prior yearly low. Those figures predate the most recent sales and therefore do not confirm that the clearing-out is complete. A calmer futures market would be needed to put the rebound on a firmer footing.

The Rate Question Has Not Gone Away

Nothing in Monday's move reflects an actual policy shift. The Federal Reserve left its benchmark rate unchanged on October 28, and investors have been waiting since for guidance on the path ahead. What eased was expectations, not monetary conditions.

JPMorgan Private Bank expects further US rate hikes in December and in the first quarter of 2027, according to Bloomberg. Yuxuan Tang of the bank argues gold will only find a durable floor once rates peak. That view caps how much weight a single strong session can carry.

The Reuters survey published October 28 paints a similarly mixed picture. The median forecast for 2026 was cut to $4,495 an ounce, with respondents citing elevated US yields, a strong dollar and a prolonged period of high rates as drags. Central bank buying and physical demand were named as supports. For 2027, the median projection was raised to $4,650 an ounce.

A Calendar Full of Tests

The next markers arrive quickly. The US midterm elections on November 3 have market participants watching for possible effects on fiscal policy and sentiment, though no specific outcome for gold can be inferred from the vote. The jobs report on November 6 looms larger still: a strong reading could reinforce the case for higher rates and undercut the recent relief.

For a more durable stabilization, several things would need to fall into place at once — fading selling pressure from leveraged players, sustained fund demand and less restrictive rate expectations. The World Gold Council's report offers evidence of differing investor responses, but no proof that the selling wave has run its course.