Spot gold hits three-month low amid risk-off moves, climb in oil prices

Gold prices plummeted to a three-month low on Thursday due to a surge in oil prices and a risk-averse mood on Wall Street. Traders favoring safer assets like U.S. Treasuries pushed the yellow metal down 2.8% to $4,024.55 per ounce, its lowest level since July 20. Gold futures also dipped 0.5% to $4,039.90/oz. Gold has now broken below the $4,100 intermediate support level for the third time this month.

Senior market analyst David Morrison noted that the daily MACDs of gold and silver have not yet dipped to oversold levels, which are necessary for significant rallies. The limited catalysts for gold's decline this week were moves in oil prices, the bond market, and Wall Street. A risk-off session saw investors dumping growth stocks and flocking to defensive sectors and U.S. Treasuries.

The decline was driven by heightened concerns over companies' debt levels for AI infrastructure projects. Meta Platforms, a major AI player, raised its capital spending forecast and introduced a new nonvoting stock class in its latest report. Analyst Peter Schiff predicted a tech wreck and an unwinding of the AI trade, but argued that gold's decline was already significant.

The upcoming week will focus on AI hyperscalers' quarterly reports and the Federal Reserve's interest rate decision, with Chair Kevin Warsh's press conference closely watched. Oil prices jumped 3.7% to $112.89 a barrel on Thursday due to fresh attacks by Iran-backed Houthis on Saudi Arabian energy infrastructure and airports, raising fears of supply disruptions.