GS Commodities/Equities: Gold - What Happened?
21 October 2025
Author: Adam Gillard
Goldman Sachs International
Summary:
Gold prices drifted lower during the China trading session (aggregate open interest on SHFE down 1%), before triggering stop-losses during the London and US market openings. There is no clear catalyst or "smoking gun" behind this move. Throughout the recent rally, gold prices have seldom reacted to specific headlines, as the broader theme of currency devaluation has been the driving factor. This makes it challenging to pinpoint a specific trigger for the correction. The most plausible explanation for the largest percentage drop in a decade seems to be positioning, combined with the fact that gold had rallied for nine consecutive weeks.
Key Observations:
1. During days when gold rallied by approximately $50/oz, there was minimal client inquiry.
2. Gold was the preferred long position across the franchise, with over 80% of participants in client surveys (including Goldman Sachs trading) anticipating further price increases into year-end.
3. Non-commodity accounts have increasingly allocated to gold, which aligns with the growing demand for physical gold.
Given these factors, a price correction was likely inevitable, even if today's timing wasn't predictable.
Desk View:
As gold prices climbed higher, the pool of interested but uninvested participants expanded. Consequently, we expect inflows to resume once stability returns to the market. For now, the key level to watch is $4,000/oz, which needs to hold to maintain confidence in the market.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!