Core Viewpoint - The recent sharp decline in gold prices, with London spot gold falling 5.31% to $4,124 per ounce and New York futures down 5.07% to $4,139 per ounce, has left investors in shock and uncertainty [1] Group 1: Reasons for the Decline - The recent surge in gold prices, which increased over 30% since mid-August, created significant correction risks, making the market vulnerable to sudden downturns [1][2] - The initial rise in gold prices was driven by expectations of interest rate cuts by the Federal Reserve, confirmed by a 25 basis point cut on September 18, with further cuts anticipated [2] - Global risk events, including the U.S. government shutdown risk, escalating geopolitical tensions from the Russia-Ukraine conflict, and uncertainties in Japan and the Middle East, contributed to increased gold demand as a hedge [2][3] - The easing of geopolitical risks and a potential resolution to the U.S. government shutdown have reduced the demand for gold as a safe haven, leading to a significant drop in prices [4][5] Group 2: Market Dynamics - The silver market's recent performance, with prices rising even more than gold, has influenced investor sentiment, leading to increased speculative activity in gold [3] - The market's internal structure has shown significant vulnerability, with high implied volatility indicating sensitivity to negative news, which can trigger large sell-offs [5] - The accumulation of speculative long positions in gold has made the market susceptible to rapid declines, as profit-taking can exacerbate downward pressure [5] Group 3: Long-term Outlook - Despite the recent decline, fundamental factors supporting gold prices, such as ongoing geopolitical tensions and a loose monetary policy environment, remain intact [6][7] - The U.S. federal debt is projected to exceed $37.9 trillion by October 2025, raising concerns about the long-term credibility of the dollar and enhancing gold's appeal as a store of value [7] - The current market environment presents a potential buying opportunity for investors, although short-term volatility may continue [6][8]