Gold futures opened Friday under the psychologically important $5,000 level, signaling a pause in one of the most powerful rallies in modern commodity markets. April gold contracts began trading at $4,950 per troy ounce, nearly unchanged from Thursday’s $4,948.40 close, after dipping below $5,000 for the first time since Monday. The retreat came alongside a broad selloff in U.S. equities, underscoring the complex interplay between safe-haven demand and liquidity-driven pressures.

Gold Slips as Equity Volatility Intensifies

Thursday’s market session was defined by risk aversion. The S&P 500 fell 1.6%, the Dow Jones Industrial Average declined 1.3%, and the Nasdaq Composite dropped 2%, as renewed concerns around artificial intelligence valuations weighed heavily on growth stocks. Under typical conditions, gold benefits from equity turbulence. However, the metal’s temporary weakness suggests liquidity dynamics may have overridden traditional safe-haven flows.

One plausible explanation is margin-driven selling. When diversified portfolios decline sharply, leveraged investors can face margin calls requiring them to liquidate assets to restore required equity levels. In such episodes, even high-performing assets like gold may be sold to raise cash. This dynamic often produces short-lived price dips that are more technical than fundamental. Despite Thursday’s pullback, gold remains firmly in a long-term uptrend. The metal is up 3.9% over the past week, 8.1% over the past month, and roughly 70% year over year. Only two weeks ago, gold’s 12-month gain approached 95.6%, highlighting the scale of the recent surge.
Early Friday trading showed modest recovery momentum, suggesting buyers continue to view sub-$5,000 levels as attractive entry points.

Investor Allocation Debate Intensifies

The renewed volatility has revived a long-standing debate: how much gold should investors hold?

Some market strategists argue for zero exposure. Robert R. Johnson of Creighton University contends that while gold may dampen short-term volatility, the opportunity cost relative to equities is too high, particularly for younger investors with long time horizons. Others advocate modest allocations. Brett Elliott of APMEX suggests 2% to 5% for income-focused portfolios, while growth-oriented investors could consider allocations up to 10% or 15%, depending on objectives and risk appetite.

Historical data supporters point to a 5% to 8% allocation. Blake McLaughlin of Axcap Ventures emphasizes gold’s resilience during geopolitical and macroeconomic instability, arguing that its defensive characteristics justify a strategic position. Thomas Winmill of Midas Funds recommends a broader 5% to 15% range, particularly through gold mining equities, tailoring exposure to risk tolerance and the balance between financial and hard assets. Investors heavily concentrated in stocks and bonds may benefit from higher gold exposure, while those with substantial real estate holdings may require less.

At the upper end of the spectrum, Vince Stanzione of First Information advocates for a 20% allocation in physical gold or ETFs, framing the metal as a long-term hedge against currency debasement and inflation.

What to Watch Next

The $5,000 threshold remains a key technical and psychological marker. Sustained trading below it could invite short-term momentum selling, while a decisive rebound may reinforce the bullish narrative driven by central bank buying, geopolitical uncertainty, and inflation hedging demand.
For U.S. investors, equity volatility and Federal Reserve policy expectations will remain central drivers. For Israeli investors navigating regional geopolitical sensitivity and currency considerations, gold continues to serve as both a strategic hedge and a volatility buffer