Can the battle to defend the 4000-point mark for gold really hold?
Has the "defense battle" for gold really begun?
At first glance, it certainly looks that way. Since this round of correction started in late August, the gold price has retreated all the way from its yearly high, falling below the psychological threshold. Beyond the market charts, Chinese households' willingness to buy gold, global central banks' reserve actions, and the bull and bear judgments in major investment banks' research reports are also surging under the surface. As a result, the 4000-point level seems to be the last line of defense for the bull-bear transition of gold, as if once lost, the gold price will start a new round of deep decline.
However, if we pull our vision away from the short-term fluctuations of K-lines and examine it in the large coordinate system of the global macroeconomy, central bank reserve behaviors and geopolitics, we will find that this "defense battle" which has been rendered as extremely tense by public opinion is more like a market headline amplified by emotions from the very beginning. It is neither the ultimate watershed between bullish and bearish logic for gold, nor can it define the long-term trend of this round of precious metal market.
What really determines the future direction of gold price has never been the gain or loss of a single integer point, but the deep-seated forces slowly fermenting behind the market: the continuously diverging buying and selling behaviors of global central banks, the Fed's dilemma-ridden interest rate hike path, the geopolitical tensions that may escalate again after the midterm elections, and the market paradigm shift that is quietly rewriting the gold pricing rules.
01
From 5626 to 4000, a Delayed Correction
To understand the current "defense battle", we first need to understand how far gold has gone this year. At the beginning of 2026, US gold futures once hit an all-time high of $5,626.8 per ounce. At that time, an almost fanatical sentiment pervaded the market: since November 2022, the three major narratives of de-dollarization, global excessive currency issuance, and normalization of geopolitical conflicts seemed to have built a perfect closed loop for gold that only rises and never falls.
But financial markets never reward linear thinking. Since the end of January this year, the gold price has started to correct. After several twists and turns, it fell below $4,000 in intraday trading on June 30. However, the price of US gold futures later rose back to $4,700, then went down all the way, and broke through the $4,000 mark again on October 23. Recently, it has been fluctuating around the $4,000 level.
The most direct pressure comes from interest rates. Gold is a non-interest-bearing asset, and its pricing logic has always been negatively correlated with the US dollar and real interest rates. Although the 10-year US Treasury yield has fallen back after hitting a record high in early October, real interest rates are still at a relatively high level.
More importantly, the market's expectations for the Fed's interest rate hikes have not faded. On October 29, the Fed announced that it would keep the target range of the federal funds rate unchanged at 3.75% to 4.00%. However, the market generally believes that the probability of a cumulative 25 basis point rate hike in December is high. This expectation of "holding still but ready to tighten at any time" hangs a sword of Damocles over gold, a zero-interest asset.
Different from the past, oil price is another straw weighing on gold. Geopolitical tensions in the Middle East continue to escalate: mutual attacks between Saudi Arabia and the Houthi movement have intensified, the Strait of Hormuz crisis is unfolding, and the Russia-Ukraine conflict continues... These events have further pushed up oil prices, strengthened expectations of sticky inflation, and made it harder for the Fed to loosen its stance. Geopolitical risks should have been positive for gold safe-haven buying, but this round has seen a rare "safe-haven backlash": risk aversion pushes up oil prices, strengthens tightening expectations, and then suppresses gold prices. Safe-haven assets are defeated by risk aversion itself, which is rare in the history of gold.
At the same time, liquidity withdrawal caused by increased volatility of global risk assets is also putting pressure on gold. The Philadelphia Semiconductor Index fell continuously around mid-October, and the collective plunge of tech stocks intensified panic selling. When investors need to free up liquidity, gold, which has the strongest liquidity for realization, is the first to be sold off. Moreover, news such as the revaluation of French sovereign credit has further exacerbated this trend.
But please note that this is not a signal of deterioration in gold's fundamentals, but a transmission of cross-asset liquidity pressure.
02
Who is Buying and Who is Selling: The Real Supply and Demand Picture of the Gold Market
So who is buying and who is selling?
On the sell side, the actions of the Central Bank of Kazakhstan are worth attention. As the world's 8th largest gold producer and one of the world's largest gold buyers before, it publicly stated that it will reduce its gold reserves by about 3% and shift to investing in US Treasuries. The reason is that the country's gold reserves account for about 78% of its total reserves, and the reserve portfolio has almost become a single-asset allocation. This is a rational decision made by a sovereign state based on diversified asset allocation, rather than a loss of confidence in gold.
In fact, Kazakhstan's case just illustrates a common sense: even the most determined gold buyers will choose to rebalance their positions when the allocation is extremely skewed. This is completely different from "being bearish on gold".
On the buy side, the actions of China's central bank constitute a completely different narrative. The People's Bank of China has increased its gold reserves for 23 consecutive months, and this trend is of landmark significance across the globe. According to data from GL Ventures, global central bank gold purchases reached 79 tons in August 2026, more than four times the previous monthly average of 17 tons. Data from the World Gold Council also shows that global central banks have continued net gold purchases over the past 15 years, and this structural trend has not changed due to short-term price fluctuations.
JPMorgan Chase stated that as gold price pulled back after testing $4,000, Chinese households' willingness to buy gold has increased significantly in the past two months. Some gold stores in China's first-tier cities are still crowded with buyers on weekends, and this dip-buying behavior is in sharp contrast with the outflow of Western ETP funds.
The situation in India is somewhere in between. India's gold imports in September plunged 83% year on year to only 13.9 tons, the lowest level since January 2023. Imports in the first nine months of this year fell by 17% compared with the same period in 2025, and the country is expected to record the weakest annual import since 2020. However, Standard Chartered believes that Diwali, which India is about to hold on November 8, may rekindle buyer interest, and seasonal factors mean that the demand inflection point may be coming soon.
It is obvious that the buying and selling in the global gold market is undergoing a profound "East-West divergence": Western investors are reducing their holdings due to interest rate and liquidity pressure, while Asian physical buyers represented by China are buying on dips. This divergence itself is an important signal: it shows that the long-term allocation logic of gold has not been shaken in Asia, and short-term selling is more driven by technical and liquidity factors, rather than a structural trend reversal.
03
Geopolitical Game and the Fed: The Tug of War Between Two Forces
It needs to be emphasized that the direction of gold ultimately depends on the game of two macro forces, namely geopolitics and monetary policy.
At the geopolitical level, the US-Iran conflict is obviously the key variable. Some market participants believe that the US-Iran conflict must end before gold can return to $5,000 per ounce. The logic behind this judgment is that the US-Iran conflict has led to major changes in global capital flows. Countries facing rising energy and food costs are diverting resources from reserve diversification to other uses, that is, prioritizing economic stability and energy security rather than accumulating more gold. As long as the conflict continues, gold will face negative pressure from the sovereign state level.
It is worth mentioning that geopolitical tensions are not unilaterally negative for gold. The logic of "debasement trade" put forward by JPMorgan Chase shows that if inflation remains sticky and countries continue to expand money supply to cope with fiscal pressure, gold, as the core asset of "de-dollarization", will benefit from the long-term demand for reserve diversification.
Morgan Stanley's report more precisely redefines gold's hedging role: Since 2020, gold has been unable to effectively hedge against the risk of stock market declines, and will even amplify portfolio losses in extreme stock market sell-offs. However, when US Treasuries are sold off sharply, its buffer value is increasingly prominent, making it a core tool to fight fiscal risks and sovereign credit risks.
In other words, in the current macro environment, gold does not hedge against "stock market crashes", but against "US dollar credit crises".
The Fed's path is more delicate. The current interest rate hike is more like a risk management operation: on one side is inflation (oil prices, AI capital expenditure, and tariff premiums are pushing inflation upward), on the other side is the high return of AI investment (high interest rates may not stop it). The only thing that can make the Fed loosen its stance is the day when the traditional economy and employment are drained. Once the recession risk outweighs inflation concerns, the monetary policy stance will shift immediately, and the high interest rate banner that suppressed gold may instead become a driving force.
The market is not without expectations for this: investors believe that the probability of a rate hike in December after the US midterm elections is 86%, but at the same time they are closely watching whether cracks appear in employment and growth data.
The US midterm elections themselves are also a time window that cannot be ignored. Historical experience shows that policy uncertainty around elections often pushes up safe-haven demand. But the particularity of this round is that the situation in the Middle East may further deteriorate after the US midterm elections. This geopolitical game rhythm of "escalation before elections, continuation after elections" means that the external shocks facing gold will not disappear in the short term.
It has to be mentioned that there are currently signs of easing in the relevant US policies towards China, but we have to guard against that this is a strategy of the Trump administration to cope with the midterm elections. After the election, it will resume its previous practices, or even go further, which will also push up safe-haven demand.
From the perspective of technical analysis, the short-term trend of gold futures is indeed not optimistic. The daily and weekly lines look relatively bad, especially the daily line has formed a unilateral downward trend. But gold futures have already pulled back to the 20-month moving average. If it can close higher in November, it means it will hold firm at this position.
What does this mean?
Gold is still in the overbought correction stage of the long-term bull market pattern. From the high point at the beginning of the year to the current level near $4000, this magnitude is within the normal range of gold's historical bull market corrections. That is to say, gold will continue to fluctuate in a wide range at this high level, and this fluctuation will continue to revolve around global hot events.
Morgan Stanley maintains gold as the preferred asset among metal assets, setting a target price of $5000 per ounce for the second quarter of 2027. But the report also points out that the role of gold in investment portfolios needs to be repositioned: it is no longer a tool to hedge against stock market declines, but a core tool to hedge against fiscal risks and sovereign credit risks.
HSBC has lowered its gold price forecast, cutting the 2026 average price forecast from $4560 to $4490, and the 2027 average price from $4925 to $4825, on the grounds that expected further US interest rate hikes and rising oil prices will put short-term pressure on gold. South Korea's Daishin Securities believes that next year's gold mine supply cycle may overlap with high policy interest rates, limiting the upside room for prices.
Putting the forecasts of these institutions together, a clear consensus emerges: almost all major investment banks recognize the long-term allocation value of gold, and the differences only lie in the short-term rhythm and target price. No institution believes that the long-term logic of gold has collapsed. This pattern of "long-term consensus, short-term divergence" just confirms a judgment: the current decline in gold price is cyclical, not structural.
Back to the original question: can the 4000-point defense battle really be held?
The answer is: this "defense battle" itself is not a real battlefield. $4000 is just an integer level. It has no inherent value anchoring significance, and it will not become a position that bulls and bears must defend to the death just because the media gives it the narrative of a "defense battle".
The real battlefield lies in interest rates, geopolitics, and central banks' balance sheets. When the Fed will shift, how the US-Iran conflict will end, and whether the PBoC's gold purchase pace will continue are the core variables that determine the next direction of gold. The $4000 level may be repeatedly crossed in the coming weeks, may form a wide range of fluctuations in the tug of war between bulls and bears, or may break through rapidly under a certain macro catalyst. But no matter what trend it takes, it will not change gold's strategic position in long-term allocation.
For investors, rather than dwelling on the gain or loss of an integer level, it is better to return to more essential questions: what proportion of gold should account for in your investment portfolio? What risks is it hedging against? Does this proportion need to be adjusted under the current macro environment... The story of gold is far from over.
This article is from the WeChat official account "Daily Capital Theory", author: Bai Kaishui De Si Kao, authorized for release by 36Kr.