The short answer: Gold is falling because of forced selling during a tech-stock selloff, rising oil prices that have lifted expectations of a December Fed rate hike, and a crowded trade unwinding. Spot gold dipped below $4,000 on October 23, 2026 for the first time since July and was about $4,050 on the afternoon of October 27, about 28% below its January 29 record of $5,594.82. Central banks and ETF investors are still buying.
Drawing on The Pomp Podcast, hosted by Anthony Pompliano (anthonypompliano.com), with Larry McDonald (March 30, 2026), Bob Murphy (January 28, 2026) and Jordi Visser (June 27, 2026). Prices as of October 27, 2026.
Gold fell below $4,000 an ounce last week for the first time since July. It's now about 28% below its January record. This piece explains why gold is falling, what the bitcoin-to-gold ratio says, and what Larry McDonald told Pomp in March when he rotated out of gold and into bitcoin. Prices are as of the afternoon of October 27, 2026.
Why is gold falling?
There are three main reasons, according to analysts quoted by Reuters, Bloomberg and Saxo Bank.
Forced selling. On October 22, AI worries pushed the Nasdaq Composite down 2.60%. Gold fell $116 the same day. Justin Lin of Global X ETFs told Bloomberg it looked like a "liquidity-driven selloff," with investors selling gold to cover margin calls. Saxo Bank said long liquidation and momentum selling outweighed the support gold would normally get from falling Treasury yields.
Oil and interest rates. Oil climbed to near six-month highs late last week amid attacks on Saudi Arabia, raising inflation worries. Traders expect the Fed to hold rates on October 28, but CME's FedWatch tool put the odds of a December hike at 83% on October 27, according to Reuters. Higher rates make gold, which pays no interest, less attractive. "Gold will continue to trade as a function of interest rate expectations and geopolitical risks," Kyle Rodda of Capital.com told Reuters.
A crowded trade unwinding. Gold ran from about $4,300 at the start of the year to a record $5,594.82 on January 29, CNBC reported. Many investors who doubted stocks piled into gold. When a trade gets that crowded, the exit can be fast.
Spot gold posted a 4% weekly drop on Friday, its steepest since June, Reuters reported. On Monday it rose 0.4% to about $4,010 as oil prices eased. On Tuesday it fell as low as $3,987 before rising about 1% to around $4,050 as oil slipped, Reuters reported. Silver traded near $54 after hitting its lowest level in almost a year.
Are central banks still buying gold?
Yes. Central banks reported net gold purchases of 39 tonnes in August, bringing the year's total to 170 tonnes, according to the World Gold Council. China's central bank added 23 tonnes in September, its largest monthly purchase since October 2023, the council said. Saxo Bank said gold ETF investors have kept adding almost without pause since July.
That's why many analysts call this a positioning problem rather than a collapse in demand. Morgan Stanley's Amy Gower called $4,000 a floor earlier this month. Bank of America has flagged a possible low of $3,750. Lin sees the next test at $3,900.
Bob Murphy made the central-bank case on the show in January, near the top. "The days of dollar hegemony are over," he said, and "central banks are diversifying, you know, not as a strategic element necessarily, but just as a matter of financial prudence." That buying hasn't stopped. It just hasn't been enough to offset the selling.
What is the bitcoin-to-gold ratio?
It's the price of one bitcoin divided by the price of one ounce of gold, or how many ounces of gold one bitcoin buys. When the ratio rises, bitcoin is outperforming gold. When it falls, gold is winning.
On March 30, when Larry McDonald, founder of The Bear Traps Report, came on the show, the ratio was about 15. Bitcoin was near $66,700 and gold futures were near $4,526. On the afternoon of October 27, with bitcoin near $80,500 and gold futures near $4,070, it was about 20.
What did Larry McDonald say about gold and bitcoin?
McDonald said his team had been "massively long gold and silver" and used the bitcoin-to-gold ratio to decide when to rotate. The ratio had been "in the high 30s," he said. Over five years of data, when it fell to 13 to 15, it was "a good time to lighten up on on gold and buy some Bitcoin. So, that's what we did."
That call has worked so far. From March 30 to the afternoon of October 27, bitcoin rose about 21% while gold futures fell about 10%, based on Yahoo Finance prices. McDonald also pointed to the gold-to-Brent-oil ratio, which had hit two standard deviations above its COVID level. "Now, it's crashed back down cuz cuz Brent's up and gold's down," he said. With oil back near six-month highs, that ratio has kept falling.
Why did gold become a crowded trade?
Jordi Visser, a macro investor and former hedge fund manager, explained it in June. He said there were two trades that both retail investors and institutions agreed on. One was AI. The other was gold, which became the bullish bet for people who were bearish on everything else. "Nobody who thinks AI is a bubble thought gold was a bubble," he said.
He also said the "debasement trade" lumped gold, silver and bitcoin together. That's why all three sold off at once. His full view on bitcoin is in Who Is Jordi Visser?.
What should investors take from this?
Gold's drop looks driven more by forced selling, oil and rate expectations than by a loss of long-term buyers. Central banks and ETF investors are still buying. But gold is not immune to sharp drops when a crowded trade unwinds. The bitcoin-to-gold ratio is a simple way to compare the two. At about 20, it sits between the "high 30s" McDonald described and the 13-to-15 range where he bought bitcoin. The near-term catalysts are the Fed decision on October 28, PCE inflation data on October 29 and oil prices. If you hold gold as a hedge, size it so you can hold through a 25% or larger drawdown like this one.
Key takeaways
Spot gold fell below $4,000 on October 23, 2026 for the first time since July and was about $4,050 on October 27, about 28% below its January 29 record.
Analysts point to margin-call selling during the tech selloff, higher oil and an 83% chance of a December Fed hike, per CME FedWatch.
Central banks kept buying through September, and gold ETF investors have kept adding since July, according to Saxo Bank.
The bitcoin-to-gold ratio is about 20, up from about 15 when Larry McDonald said he rotated from gold into bitcoin in March.
The Fed decision on October 28 and PCE inflation data on October 29 are the next catalysts.
Best quotes from the episodes
"Whenever it's hit 13, 14, 15... it's a good time to lighten up on on gold and buy some Bitcoin. So, that's what we did cuz we were massively long gold and silver."
"Now, it's crashed back down cuz cuz Brent's up and gold's down."
"I think people are realizing um the days of dollar hegemony are over."
"Central banks are diversifying, you know, not as a strategic element necessarily, but just as a matter of financial prudence."
"Nobody who thinks AI is a bubble thought gold was a bubble. Gold was the way bears got to come out and go, I'm bullish on something. It's just gold."
FAQ
Why is gold falling?
Analysts cite margin-call selling during the October 2026 tech-stock selloff, higher oil prices that raised the odds of a December Fed rate hike, and a crowded trade unwinding after gold's record in January.
How far has gold fallen?
Spot gold was about $4,050 on the afternoon of October 27, 2026, about 28% below its record of $5,594.82 on January 29, 2026. It dipped below $4,000 on October 23 for the first time since July.
Are central banks still buying gold?
Yes. Central banks reported net purchases of 39 tonnes in August 2026 and 170 tonnes for the year through August, according to the World Gold Council. China's central bank added 23 tonnes in September.
What is the bitcoin-to-gold ratio?
It is the price of one bitcoin divided by the price of one ounce of gold. It was about 15 on March 30, 2026 and about 20 on October 27, 2026.
What did Larry McDonald say about gold and bitcoin?
On March 30, 2026, McDonald said that when the bitcoin-to-gold ratio fell to 13 to 15, it was a good time to lighten up on gold and buy bitcoin, and that his team did that.
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Watch or listen to the full episodes
Hear Larry McDonald explain the bitcoin-to-gold rotation, Bob Murphy on central-bank gold buying and Jordi Visser on why gold got crowded.
"Bitcoin, Gold & Energy: The Next Massive Wealth Shift" with Larry McDonald, March 30, 2026. The bitcoin-to-gold ratio discussion starts around the 21-minute mark.
"Economist Explains Why Gold Is Beating Bitcoin" with Bob Murphy, January 28, 2026. The central-bank discussion starts around the 4-minute mark.
"Why Are Bitcoin & AI Stocks CRASHING?!" with Jordi Visser, June 27, 2026. The debasement-trade discussion starts around the 39-minute mark.
Related reading
Sources
About The Pomp Podcast
The Pomp Podcast is hosted by Anthony Pompliano and covers the future of business, finance and technology. The show features Pomp's conversations with founders, investors and economists about bitcoin, markets, AI and the economy. Follow The Pomp Podcast on X.
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This article reflects the opinions of the guests and host as shared on The Pomp Podcast. It is guest opinion, not investment advice. Do your own research before making any investment decision.
