Commerzbank Warns: ETF Selling Could Trigger Second Wave of Gold Decline
nashnova research
Gold tumbled nearly 7% after failing to hold $4,000, and Commerzbank warns a second leg down looms if ETF investors start systematic selling — with the dollar at its strongest since April 2025 and 10-year Treasury yields back above 5%.
Down nearly 7% in a week — what happened?
Gold has fallen roughly $290 since last Tuesday, a drop of nearly 7%, after failing to hold $4,000/oz.
Comex front-month gold settled Friday at $3,879.70/oz — the second-lowest close this year; front-month silver fell to $49.031/oz, its lowest since November 7 last year.
For the week, gold lost 4.5% and silver 5.3% — silver took the harder hit.
Rates didn't rise that much — why did gold fall so hard?
Commerzbank analyst Carsten Fritsch noted that rate expectations rose far less than gold fell, and bond yields remain below early-October levels.
This means → the selloff was amplified by sentiment and technical liquidation, not driven by rates alone.
XS.com analyst Simon-Peter Massabni argued the move goes beyond a technical correction — investors are reassessing inflation risk and the Fed's policy path.
How did the dollar and Treasury yields become gold's enemies?
The dollar hit its highest level since April 2025; the 10-year Treasury yield climbed back above 5%.
In plain terms = gold pays no interest. The higher Treasury yields go, the greater the opportunity cost — holding a zero-yield metal when bonds offer 5%+ becomes harder to justify.
Persistent inflation, combined with Fed officials backing a possible 50-basis-point hike next month, is cementing the hawkish tilt.
The chart is damaged — does the long-term case still hold?
Saxo Bank's head of commodity strategy Ole Hansen said the failure at $4,000 has caused technical chart damage, but short-term weakness should not be confused with a shift in long-term fundamentals.
Central banks continue to accumulate gold for reserve diversification, and ETF investors have shown resilience despite recent volatility.
This means → underlying demand can limit the pullback, but if yields and the dollar keep rising, further near-term weakness is hard to prevent.
Will the "second wave down" actually arrive?
Commerzbank's core warning: if ETF investors turn price weakness into systematic position cuts, the second wave shifts from risk scenario to reality.
Friday's below-forecast US October PPI — the producer price index, which tracks factory-gate inflation — and steady oil prices temporarily eased inflation fears.
Put simply = the key variable is one thing: whether ETF money holds firm or heads for the exit. That alone decides if gold stabilizes here or takes another leg down.
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