Gold prices fell below $4,000, down 9% from the recent high, after soaring 27% in the previous 7 weeks. Industry executives say, "Gold prices need to drop first before rising."

Gold has fallen below $4,000 per ounce, and industry executives generally believe that the previous upward trend has become unsustainable, with the market squeezing out the "bubble."

On Monday, international gold prices dropped to a low of $3,980 per ounce, having just surged 27% in just seven weeks, reaching a peak of $4,381 on October 20. Within a week, gold prices have fallen more than 9% from recent highs, with industry insiders attributing the earlier surge to "speculative" positions taken by investors.

Industry executives expect gold prices to enter a deeper correction in the coming weeks. John Reade, a market strategist at the World Gold Council, stated during a break at the London Bullion Market Association's Kyoto annual conference: "I think many people in the industry would actually welcome a deeper correction than we have now." A senior executive at a major gold trading bank was even more blunt: "Only a madman would think gold could rise this high."

Although institutions like HSBC, Bank of America, and Société Générale still maintain a target of $5,000 for gold prices next year, even the bulls are feeling nervous about the recent decline. Currently, the gold market faces issues including the sustainability of retail investor demand and whether central banks will slow their gold purchases due to high prices.

Industry Welcomes "Healthy Correction"

On October 28, media reports indicated that at this week's largest annual conference for the gold industry, the optimism of attendees was unexpectedly interrupted by a warning—gold prices may need to fall further to resume their upward trend.

Industry executives view this round of decline as a "healthy correction" to the overheated rise. John Reade, representing gold miners, stated that many industry insiders actually hope to see a deeper correction.

Nicholas Frappell, global institutional market director at Australia's ABC Refinery, pointed out:

"We are definitely in a correction, and it won't end in a few days. If gold prices drop to $3,700 and then retest new highs, I wouldn't be surprised."

Paul Fisher, the outgoing chairman of the London Bullion Market Association, stated that gold prices typically do not continue to rise indefinitely, and the recent surge was due to market "bubbles." He said:

"That's why last week's movement was quite important; it just squeezed the bubbles out of the market, and you can see some corrections because it cleared out speculative positions, and then the market is ready to rise again. Gold prices may move higher from here."

This year's rise in gold prices has been primarily driven by investor demand, as they view gold as a hedge against geopolitical uncertainty, high government debt levels, and a declining dollar.

Central banks have also been purchasing gold to diversify their assets and reduce reliance on the dollar, although according to IMF data, these purchases have slowed in recent months.

Gold prices have risen by more than two-thirds this year, breaking the critical $3,000 mark in March and surpassing $4,000 in early October However, the recent price surge has led many industry professionals to point fingers at "speculative" positions, believing that this influx of funds has pushed prices too high and too quickly, resulting in an unsustainable upward trend.

Long-term Outlook Remains Positive

Despite expectations of a short-term correction, many seasoned professionals and analysts still maintain confidence in the long-term outlook for gold. HSBC, Bank of America, and Société Générale have all set their gold price target for next year at $5,000.

But even the bulls are uneasy about the potential for a sharp decline in the near term.

Reade from the World Gold Council stated that after speaking with some individuals, he found that "some believe that $3,500 is a healthy price for the gold market, as it is still an absurdly high price. From my perspective, I think that is certainly possible." The World Gold Council sponsors a gold-backed ETF.

Currently, one question facing the market is whether the recent interest from retail investors can be sustained—investors in Australia and Japan have been queuing up to buy small gold bars and coins in recent weeks.

Another unknown factor is the pace of central bank gold purchases. Central banks have set record levels of gold purchases over the past three years, but high gold prices may prompt them to slow down their buying. Some smaller central banks have even had to sell gold to maintain their allocation ratios, as rising gold prices have increased gold's proportion in their assets.

Ruth Crowell, CEO of the London Bullion Market Association, stated that gold is on a "steady upward trajectory" and is becoming a "mainstream" choice for investors.

"We are seeing an increase in trading volume. Investors around the world, at a mainstream level, want some exposure to gold; to me, this doesn't feel like a moment but rather a new chapter."