Gold’s recent volatility has raised eyebrows among investors, particularly after its sharp drop below $4,000 an ounce on October 30. Peter Boockvar, chief investment officer at OnePoint BFG Wealth Partners, attributed the decline to forced selling rather than a fundamental shift in the metal’s value. He noted that gold had been trading in an unusual tight correlation with the S&P 500, as if it were part of the tech trade, which he described as misguided. “Gold is treated like an AI stock today, which it’s not,” he said, suggesting that the move presented a buying opportunity for long-term investors.
Gold rebounded swiftly, climbing about $112 to around $4,041 an ounce by midmorning on November 4, following a drop in the dollar and Treasury yields post-midterm elections. Central bank buying played a key role in supporting gold prices, with net purchases of 321 tonnes in the third quarter, the fastest pace since 2024, according to the World Gold Council. Boockvar highlighted that real interest rates are rolling over and the dollar appears vulnerable, which could further bolster gold’s appeal.
Boockvar also cautioned against expecting the Federal Reserve to rescue the AI trade. He argued that the Fed’s potential rate hike in December would likely be a tweak rather than the start of a new hiking cycle. “If you’re selling your gold because, oh, the Fed’s gonna go on this big rate-hiking cycle, that’s the wrong reason, ’cause it’s not gonna happen,” he said. He warned investors not to rely on the Fed to bail out the AI-driven stock market, emphasizing the risks of overconcentration in tech stocks.
Looking ahead, Boockvar advised focusing on non-AI sectors like energy and consumer staples. He also noted that long-term interest rates should keep trending higher, with debts and deficits playing a significant role in shaping economic outcomes. The mood among mining companies at the New Orleans Investment Conference was positive, suggesting confidence in a continued bull market for gold despite recent corrections.