The recent precious metals market has been nothing short of a "massacre."

Gold, silver, platinum, and palladium all plummeted across the board, leaving no room to fight back. Spot gold directly fell below the $3,900 per ounce mark, dropping more than 3% intraday and hitting a one-year low; Silver fared even worse, falling below the $50 mark and dropping more than 17% for the month.

Many friends are probably anxious as they watch their precious metal assets shrink in their accounts: What's going on?

Don't worry, Kingtech Capital will break down the logic behind this. Simply put, this is a "perfect storm" created by inflation, central bank policies, and tech stock sell-offs.

| Central Bank Hawkish: High Interest Rates Are the 'Fatal Weakness' of Precious Metals

The root of this decline lies in the attitude of major central banks worldwide.

Although the Federal Reserve and ECB held steady this week, their words sent a signal: tightening is not over and inflation is too stubborn.

US September inflation data accelerated again, with gasoline and commodity prices rising, directly confirming market expectations for a rate hike in December (with a probability of 70%).

That was really fatal. Gold and silver are assets that do not generate interest, and when interest rates remain at "higher and longer" levels, holding cash or Treasuries is clearly more cost-effective than holding gold.

Coupled with the surge in Brent crude oil prices and the lingering shadow of energy inflation, the appeal of non-interest-free assets has naturally diminished.

| Tech stocks "crash" across the market: forced to sell gold to cover positions

You might ask, what does the drop in tech stocks have to do with gold?

It has a big connection. The current market logic is: liquidity is king.

Tech stocks have plunged continuously due to uncertain AI spending prospects, causing many institutional investors' accounts to incur losses and even triggering margin call requirements.

To fill the gaps in tech stocks or cope with redemption pressure, they have had to sell their most liquid asset—gold.

This is what they call 'When the city gate catches fire, the fish in the moat suffer.' A TD Securities strategist also said that gold broke below key technical support, triggering a sell-off by trend funds, and this chain reaction dragged gold prices down.

| Why has silver fallen even harder?

In this round of adjustment, silver performed even weaker than gold.

The reason is simple: silver is not only money (financial attribute) but also an industrial raw material (industrial attribute). Currently, the market is concerned that high interest rates are suppressing investment demand, and on the other, that the global economic slowdown may affect industrial manufacturing. With both sides struggling, silver naturally fell the hardest.

Currently, the gold-silver ratio has surged, indicating that silver is extremely fragile relative to gold. Although technical indicators show oversold, as long as panic persists, silver may continue to inertly decline.

Not only is there no buyer in the financial market, but people are also watching in the physical market.

For example, in gold-consuming countries like India, buyers are now generally choosing to "lie flat," delaying purchases and waiting for prices to fall further. Without physical demand as a bottom, the rebound in gold prices loses some support.

Kingtech's Perspective | Is the Darkest Hour Also a Good Opportunity to Position Your Position?

Although the current market situation looks frightening, Kingtech Capital believes that panic often breeds opportunity.

Commerzbank analysts pointed out that the decline in precious metals has been "overamplified." When selling pressure on tech stocks eases or the market digests rate hike expectations, gold prices are likely to rebound.

1. Do not blindly sell: The current price already reflects extremely pessimistic expectations, and technically it is severely oversold. Cutting losses at this time is extremely cost-effective.

2. Watch for "wrong selling" opportunities: If gold was mistakenly sold to buy into tech stocks, once the market stabilizes and funds return, gold will rebound first.

3. Partial Accumulation: For long-term investors, gold below $3,900 and silver below $50 have entered highly attractive value ranges. You can start trying to buy in batches, but don't go all-in, since the central bank's high interest rate stick is still hanging over your head.