Gold's Two-Speed Rebound: Bullion Gains 2.3% as Leveraged Money Exits and Committed Funds Stay Put

Gold's latest bounce is drawing buyers back, but the rally rests on a market that is pulling in two directions at once. Bullion climbed 2.3% to $3,963.39 an ounce, extending a recovery that began after Friday's selloff — a slide that Reuters linked to sales of technology and AI stocks as well as a fresh need for liquidity.

The trigger for the turn came from the energy market. Reuters reported talks between Iranian negotiators and Qatari mediators over an end to the US-Israeli war against Iran, a prospect that pushed oil prices lower and cooled inflation and rate-hike worries. Iran has floated a possible reopening of the Strait of Hormuz and a resumption of nuclear talks, though on conditions Washington has not accepted — leaving the tailwind for gold tied to political developments whose outcome remains open.

A rebound built on hope, not confirmation

Nikos Tzabouras, an independent financial market analyst, told Reuters the upswing reflects hopes for a diplomatic breakthrough between Washington and Tehran as well as doubts about the durability of the AI boom. His caution lands on the day of the US midterm elections, with the central question being how sturdy the countermove after the selloff really is.

Lower energy prices ease one burden on gold without resolving the monetary-policy picture. The market had continued to price in a US rate hike in December. The US PCE price index rose 0.5% in September, up from 0.3% in August, and the Federal Reserve left its benchmark rate unchanged at 3.75–4.00% on October 28. Whether rate expectations actually retreat is what matters for the durability of the recovery — diplomatic optimism alone offers no confirmation.

JPMorgan Private Bank expects further US rate increases in December and in the first quarter of 2027, according to Bloomberg. Yuxuan Tang's view is that gold will only find a stable floor once rates peak, a judgment that limits how much weight a single strong session can carry.

Futures traders beat a retreat

Positioning data point to a market where speculative confidence was already fading before the bounce. The CFTC report published Friday, with an October 27 cut-off, showed net long positions held by large speculators in COMEX gold at 186,451 contracts — 13,414 fewer than a week earlier. Hedge funds have now sold gold futures for nine consecutive weeks, according to Saxo.

Those figures describe the picture before the latest sales, so they do not prove the cleanup is complete. Saxo put speculative net long positions at 107,000 contracts ahead of the selling wave, still 15,000 above the prior yearly low. An easing of pressure in the futures market would be important to give the recovery a broader base.

Long-term holders are not heading for the door

The World Gold Council's weekly report, published today, draws a line between short-term liquidation pressure and the stance of longer-horizon fund investors. Since mid-October, positions held by professional asset managers have fallen by roughly 11 tonnes, while other reportable and non-reportable positions plus spread-related holdings dropped by about 70 tonnes. The organization also points to a rotation into bonds.

That distinction matters: selling to unwind leveraged positions is not the same as a broad retreat by long-term gold holders. The report describes weaker US demand alongside a more optimistic stance among steady fund investors. Saxo's analysts paint a similar picture — gold funds saw outflows of about 6 tonnes last week, against inflows of roughly 150 tonnes since July.

Fiscal anchors and the next test

Carsten Menke of Julius Bär played down the significance of the US midterm elections on November 3 for gold's longer-term backdrop, saying they are unlikely to materially change the fiscal picture. Persistent deficits and the US debt load remain supportive over the longer run.

The next confirmed economic marker is the October US employment report on November 6. A strong reading could bolster the case for higher rates and undercut the recent relief. For a more durable stabilization, several things would need to fall into place: fading selling pressure from leveraged investors, steady fund demand and less restrictive rate expectations. The World Gold Council's report offers evidence of differing investor responses — but no proof yet that the selling wave has run its course.