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There was no obvious catalyst for the move: some traders pointed to profit-taking by hedge funds, others said there had been selling by Chinese banks.

But it was a reversal that gold specialists had been anticipating for some time, as the precious metal — after already smashing record highs this year — soared a further 30% in just two months.

On New York’s Comex futures market, interest in bearish put options on gold rose to some of the highest levels relative to bullish call options since the global financial crisis of 2008. The manager of one commodities-focused hedge fund expressed frustration that, despite being a long-term gold bull, he had failed to fully capitalize on the rally because he had started betting on a correction too early.

Still, it remains hard to find a gold bear among precious metals analysts whose forecasts — for the most part — have been bullish but not bullish enough over the course of the last two years. When the London Bullion Market Association carried out a survey of analysts at the start of the year, almost every respondent expected prices to rise, but none thought it could trade above $3,300 during 2025.

“We expect de-risking and profit taking by investors to be met by dip buying from other segments of demand including central banks and other physical buyers, ultimately keeping reversals relatively shallow,” Gregory Shearer at JPMorgan Chase & Co. said in a note this week.

Yet the gold market’s history gives some reasons for caution. In September 2011, when gold hit a high of $1,921 before falling back, traders and analysts who gathered that month for the annual LBMA conference were almost universally bullish. As it turned out, it would take another nine years before gold reclaimed that high.

The current surge in gold has been driven by a wave of central bank buying, which accelerated dramatically after sanctions on the Russian central bank in 2022, and fears about unsustainable levels of government debt around the world.

JPMorgan’s Shearer highlighted the possibility that central banks will take a step back from the market as the major risk to his bullish forecasts, which see gold averaging more than $5,000 by the final quarter of next year.

But the most recent leg of the rally — coming after US President Donald Trump attempted to fire US Federal Reserve governor Lisa Cook — has been turbocharged by a wave of buying from ordinary “retail” investors, with gold shops running out of stock and more money piling into exchange-traded funds than ever before.

In some of the world’s main gold-buying hubs, there was little sign this week that the fall in prices had dented their enthusiasm. Some dealers reported less interest after a hectic two months, but others had record sales.

Pete Walden, deputy chief executive officer at BullionStar, a dealership in Singapore, said his company had had its busiest day ever on Tuesday. “We had a queue before opening, with many more buyers than sellers,” he said. “I think many are using it as an opportunity to buy the dip.”

In the US, Stefan Gleason of dealer Money Metals Exchange LLC, said his company had more interest from “bargain hunting” buyers than it could handle.

And in Tokyo’s swanky Ginza district, Vietnamese student Hang Viet, who is in his 20s and has lived in Japan for about a decade, arrived at a branch of Tanaka Precious Metal Group Co hoping to buy a small gold bar.

“I believe gold prices will keep rising in the long run,” he said. “I saw the current dip as an opportunity.”

–With assistance from Suttinee Yuvejwattana, Yusuke Maekawa, Srinidhi Ragavendran and Yvonne Yue Li.

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