Gold futures fell through the closely watched $4,000-an-ounce threshold last week as large non-hedge-fund accounts accelerated selling, overwhelming the support gold would normally receive from lower real yields, weaker equities and geopolitical risk. December futures settled at $3,898.90, down 3.3% in one session, while spot gold reached its lowest level since October 2025 and stood roughly 30% below its January peak near $5,600.
Goldman Sachs attributed most of the recent futures outflow to traders classified in Commodity Futures Trading Commission data as other accounts and non-reportable traders. Those groups accounted for about 95% of the $19.5 billion in gold futures selling recorded since Sept. 22, according to the bank's weekly commodities report. Hedge funds were not identified as the primary source of the liquidation.
The selloff brought unusually heavy activity to both futures and exchange-traded products. CME gold volume rose 80% from the previous day as prices broke below $4,000. The SPDR Gold Shares ETF, known as GLD, recorded about $4 billion in turnover, placing it seventh among all U.S.-listed ETFs for the session.
Selling outpaced official-sector buying
Positioning data compiled from CFTC reports showed selling picked up during the Oct. 20-27 period. Managed money accounts, other traders and non-reportable positions sold a combined $8 billion of gold futures during that week, extending bearish flows to five consecutive weeks.
Across the five-week period, Goldman Sachs calculated that $5.2 billion of the move reflected the closing of long positions, while $2.8 billion came from new short positions. At a reference price of about $4,000 an ounce, the full $19.5 billion in futures sales represents roughly 4.9 million ounces, or around 150 metric tons of gold.
That is a substantial volume beside official-sector demand. Goldman Sachs' central-bank tracker estimated purchases at about 85 tons a month, meaning the five-week futures outflow was comparable to nearly two months of central-bank buying.
The comparison helps explain why favorable macroeconomic conditions did not stabilize the metal. During the observation period, U.S. 10-year real yields declined by 11 basis points, equities came under pressure and tensions in the Middle East remained elevated. Gold nevertheless fell 1.6%, suggesting that the immediate market was being driven more by position reduction than by the usual interest-rate and risk-off signals.
Dollar and oil gains added pressure
Brent crude gained 4.1% over the same window and the U.S. dollar index rose 0.6%. Goldman Sachs found that long exposure in the other trader category had a moderately negative rolling six-month relationship with both the dollar and Brent crude. In practice, that pattern indicates that positions in the category have tended to shrink when the dollar and oil prices rise.
The bank raised the possibility that some selling may reflect liquidity needs among sovereign entities, which can hold gold as a reserve asset that is readily sold when cash is needed. It also pointed to sizable physical shipments into London, where gold bars can be sold into one of the world's deepest bullion markets.
The available positioning data does not identify individual sellers or establish why any particular account sold. Yet the concentration of selling outside managed-money funds, combined with physical flows toward London, leaves room for reserve-management activity to have contributed to the pressure.
Goldman Sachs said the liquidation may not be complete. As of Oct. 27, long positions held by the other category remained above their two-year median both in dollar terms and as a share of total open interest. That group's share of open interest reached about 20% in mid-October before slipping to around 18% after the selloff. At the February low, it had stood closer to 11% to 12%.
Prices weakened further after the CFTC reporting cutoff. Gold fell another 4.3% between Oct. 27 and Oct. 30, even as Brent added 3.7%. The report said subsequent declines in the dollar and real yields also failed to arrest the fall, reinforcing the view that positioning had become the dominant near-term force.
Options market shifts toward downside protection
Options trading reflected a more defensive tone. Gold's standardized 25-delta put/call skew, a measure of whether traders are paying more for downside or upside protection, rose to the 85th percentile of its one-year range. The measure moved from around minus 10 in September to about plus six, signaling a sharp turn from demand for call options toward greater demand for puts.
Three-month implied volatility also climbed from a 2026 low near 19% to above 21%. On the day gold broke below $4,000, implied volatility rose by 3.5 volatility points, while two-week realized volatility was running at 18.5. Six weeks earlier, Goldman Sachs said, options activity had been centered on call buying.
ETF holdings have shown less dramatic evidence of broad physical liquidation. GLD holdings as of last Thursday remained only about 1% below their historical high, according to Goldman Sachs. The bank estimated that even if all of last Friday's GLD outflow represented reduced holdings, the amount would equal roughly 1 million ounces, against total GLD holdings of more than 100 million ounces.
That split between sharp futures selling and comparatively resilient ETF holdings suggests the market stress has so far been concentrated in leveraged and actively managed derivatives positions rather than a wholesale exit from gold-backed funds.
Technical levels and rate expectations
Goldman Sachs' trading desk identified $3,850 as the next support level after the failure of $3,950. With December futures settling at $3,898.90, the market was less than 1.5% above that level. The report also cited $4,070 as a near-term trough used in a previous downside scenario tied to a more hawkish Federal Reserve.
Market pricing cited by Goldman Sachs placed the probability of a Federal Reserve rate increase in December at about 75%. Higher policy-rate expectations can weigh on non-yielding assets such as gold, particularly when they strengthen the dollar and lift financing costs for leveraged positions.
Goldman Sachs maintained its longer-term target of $5,400 an ounce by the end of 2027, but its near-term assessment was more restrained: fast futures liquidation has been outpacing the slower, steadier pace of official-sector demand.
The gold decline alone does not establish that money is moving into cryptocurrencies or other digital assets. A sustained shift would require evidence in fund flows, spot-market volumes and blockchain-based transfer data, rather than an assumption that sellers of bullion will automatically redeploy into digital tokens.
Worried about gold’s plunge? Compare it with Bitcoin in our guide: Gold vs Bitcoin – which to invest in.
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