The week that Gold lost its shine.

October 27th, 2025

It is not common for Gold prices to fall almost 10% in just a few days. Actually it is very very rare and one has to go back to March 2008 to find a similar occurrence, which is when the great financial crisis and the collapse of major US banks was brewing. We are definitely not implying that last week's drop is a similar omen of what could happen six months from now, as the sell-off appears to be a natural evolution of an asset whose prices started going parabolic and momentum players as well as retail investors joined the party at a late stage. Those who bought the yellow metal close to the peak at almost 4400$ will also make money eventually but it might take more time than they thought when they were buying in frenzy and there is a clear danger of the prices sliding even more, before they can resume their rally.

From a technical perspective, not much damage has been done. Gold is comfortably above various support levels, but sentiment has taken a blow and the market is probably in wait-and-see mode. The problem is that given its meteoric rise in late September and October, the important support levels are another 10% lower at around 3700$ (50-day moving average) while the long-term support (200day moving average) is 15% lower at about 3350$. Nobody knows if it is going to finally test those levels and what kind of patience the traders who bought late will have, if it starts approaching them. Another negative factor is that buying physical gold for the Indian wedding season seems to be over now and we will have to wait for the Chinese one in February. All in all, the steep price did not surprise and similar "crashes" are to be expected in many other momentum trades that have gone to the stratosphere.

The US October inflation increased less than expected. It was reported at 3.0% vs forecasts for 3.1%, but it should be noted that it continued to move higher albeit at a slower than feared pace. It was standing at 2.3% in April and much closer to the FED's target of 2% (although the target is on the PCE index). Core CPI which excludes energy and food fell to 3%, from 3.1% in August and was better than expected. All of the positive surprise can be attributed to the rents' inflation which has a big weight on the calculation and it rose by just 0.1% vs expectations for 0.4%. With respect to the tariffs impact we should note that Core goods ex-transportations rose by 0.35% which is the second largest increase of the last 2.5 years. All in all, this is a report that will make the FED officials feel a bit more comfortable with their thesis that inflation is rising but within limits.

The Eurozone October Composite PMI rose above expectations. In particular it rose to 52.2 from 51.1, with improvement cited in both manufacturing and services. Manufacturing PMI rose to 50.0 which is the highest since June 2022, but we should caution that it just returned to the neutral level of 50 from the depressed levels of the previous years. But still the trend appears to be positive. The Services sub-index rose to 52.6, the highest since August 2024 and exceeded expectations by more 1.5 points. On a country level, German services jumped to 54.5 from 51.5 while Manufacturing stalled below 50, which is strange given all the optimism on defense and infrastructure spending promised by the new government. France's numbers were rather weak, which is normal as the survey was carried out amidst the recent political uncertainty. All in all, the numbers show a gradual improvement and should support the case for potential European equities' revenue and earnings upgrades for 2026 to take place.

A blind FED is meeting on Wednesday to decide on interest rates. The market expects and wishes for yet another rate cut, although this time it would be tricky. As a reminder, the case for rate cuts has been based on the assumption that the labor market is weakening further with the monthly non farm payrolls stalling to almost zero last time. The problem is that due to the US government shutdown the latest labor market data have not been published and hence the rate-setting committee has no new information on which to base a decision to cut or not. The most appropriate action would be to leave them unchanged as the rest of the economy does not appear to be in an alarming state, but Friday's inflation data could give them the necessary excuse to cut again as a pre-emptive/insurance move. It will be very interesting to watch.

In terms of geopolitical developments nothing much happened. Trump and Putin cancelled their meeting to have been held in Budapest, with no reason published. We suspect that after Poland's comments that they cannot guarantee the passing through their airspace of the Russian plane without having to intervene in order to arrest Putin, it was best decided to avoid it. In any event, there was little hope that something substantial would have come out of it. On the contrary, the meeting between Trump and Jinping is happening this Thursday in South Korea. What comes out of this meeting is anybody's guess, but the latest headlines from both countries do not point to optimism. Of course these can be just negotiating tactics, so we will have to wait a few more days for the final outcome, if any.

Bonds lost ground, both in the US and Europe. As equity markets recovered and gold prices fell, investors/traders took profits in bonds last week. The US 10yr yield which had fallen to as low as 3.95% returned to 4.05%, especially after the Friday benign inflation report. The German equivalent also returned to around 2.65%, proving for now that the visit to lower yields for the long end of the curve is difficult to be sustained. As we have mentioned several times, the long maturities (7yr +) are not attractive at current levels, especially in the lower quality space. We prefer the highest quality for the long-end as insurance for geopolitical or other crisis (except for an inflation crisis...) and the short-end for all other fixed income allocations.

Global equities had a positive week in a volatile manner. The main US indices rose by 2% for the week to reach fresh record highs, as Europe also posted decent returns of more than 1.5% on average. The Swiss market (SMI -0.5%) underperformed as the world was feeling less fearful and profit taking took place in defensive sectors such as pharma, utilities and consumer staples. Asia was strong with a 3% weekly gain, as Japan has the first female Prime Minister in history and Chinese Technology companies rallied as the Chinese government revealed its new 5-year plan where technology (AI, semiconductors) was mentioned as an important focus area.

A big week for earnings reports lies ahead. The US mega caps Apple, Amazon, Microsoft, Alphabet and Meta Platforms are among others set to report on Wednesday and Thursday after the respective close of the market. Given their recent rallies and their demanding valuations investors will need to hear almost perfect results as well as good guidance for the next quarter(s).

Chart of the Week : A record inflow in Gold ETFs in September.

The above chart shows the monthly inflows in Gold ETFs by investors since January 2024. We first see that in 2024 during the first four to five months investors were reducing their positions and it was only until the second half of the year that they were buying back the metal. Moving into this year, a totally different picture has emerged. Monthly flows have been above average with buying reaching a record 100 tonnes per month right before and during Trump's tariffs announcements. Then in September we saw 150 tonnes of inflows into the ETFs, which is the highest ever recorded. These large inflows in February-April by retail and professional investors explain much of the increase in price during that period, after which Gold prices stalled for several months. And of course the recent frantic buying explains the price spike in the last two months or so. The problem with this chart is that most of the new money has bought Gold close to the recent peak and we suspect that some of it is from momentum chasers that are quick to change their mind. A period of volatile pricing lies ahead.

Disclaimer

• The content of this document has been produced from publicly available information as well as from internal research and rigorous efforts have been made to verify the accuracy and reasonableness of the hypotheses used. Although unlikely, omissions or errors might however happen.

• The data included in this document are based on past performances and do not constitute an indicator or a guarantee of future performances. Performances are not constant over time and can be positive or negative.

• This document is intended for informational purposes only and should not be construed as an offer or solicitation for the purchase or sale of any financial instrument and it should not be considered as investment advice. The market valuations, views, and calculations contained herein are estimates only and are subject to change without notice. Any investment decision needs to be discussed with your advisor and cannot be based only on this document.

• This document is strictly confidential and should not be distributed further without the explicit consent of Kendra Securities House SA.

• Sources: Chart of the Week : KSH/ World Gold Council