A gold crash everyone saw coming lures bargain hunters worldwide

As pictures of queues outside gold stores flooded social media over the past month, professional precious metals traders were getting nervous.

- JACK FARCHY, YIHUI XIE, & JACK RYAN

Gold is “an overcrowded trade that’s overextended by every technical metric,” Nicky Shiels, head of research at precious metals refiner MKS Pamp SA, wrote to clients on October 6. On Monday, as prices soared to new record highs near $4,400 an ounce, Marc Loeffert, a trader at Heraeus Precious Metals, warned that the metal was “getting even more overbought.”

“The reckoning came this week. Gold prices plunged by as muchas 6.3 per cent on Tuesday, the biggest drop since 2013, and held losses through Friday to close at $4,113.05 an ounce. In dollar terms, its $138.77 weekly decline ranked among the largest ever.

Was it a turning point in gold’s multiyear bull market, or just a dip? In Bangkok's Chinatown, the nation’s gold trading hub, Sunisa Kodkasorn, a 57-year-old textile factory worker, had no doubt. “Gold is the best investment,” she said. “We decided to gather all our money and come today because we knew prices had dropped.”