Fall below $4,000, gold price has dropped 9% from its peak after surging 27% in the previous 7 weeks; industry executives say "gold prices need to fall before they can rise."

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

On Monday, international gold prices fell as low as $3,980 per ounce, after surging 27% in just seven weeks to a high of $4,381 on October 20. Within a week, gold prices have dropped more than 9% from the recent high, and industry insiders attribute the earlier surge to investors' "speculative" positions.

Industry executives expect gold prices to enter a deeper correction in the coming weeks. John Reade, market strategist at the World Gold Council, said during a break at the LBMA Kyoto annual meeting: "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 such as HSBC, Bank of America, and Société Générale still maintain a target of $5,000 per ounce for next year, even the bulls are nervous about the recent decline. Currently, the gold market faces questions regarding the sustainability of retail investor demand and whether central banks will slow down gold purchases due to high prices.

Industry Welcomes "Healthy Correction"

On October 28, according to media reports, at this week’s largest annual industry meeting, the optimism of attendees was interrupted by unexpected warnings—gold prices may need to fall further before resuming an upward trend.

Industry executives view the current drop as a "healthy correction" to the overheated rally. John Reade, market strategist of the World Gold Council, representing gold miners, said that many industry insiders actually hope to see a deeper correction.

Nicholas Frappell, Global Institutional Markets Manager at ABC Refinery Australia, noted:

"We are definitely in a correction, and it won't end in a couple of days. I wouldn't be surprised if gold falls to $3,700 before retesting new highs."

Paul Fisher, the outgoing chairman of the London Bullion Market Association, said that gold prices do not usually rise continuously, and the recent surge was due to a market "bubble". He said:

"That's why last week's move was quite important—it squeezed the bubble out of the market. You can see some corrections because that clears out speculative positions, and then the market is ready to go higher again. Gold prices could go up from here."

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

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

Gold's rally this year has at one point exceeded two-thirds, breaking through the key $3,000 mark in March and rising above $4,000 in early October.

However, the recent surge in prices has prompted many industry insiders to blame "speculative" positions, arguing that such money pushed prices up too high, too fast, resulting in an unsustainable rally.

Long-Term Outlook Remains Positive

Despite expectations of a short-term correction, many veteran professionals and analysts remain confident in gold’s long-term prospects. HSBC, Bank of America, and Société Générale have all set a target price of $5,000 per ounce for next year.

Even so, even the bulls are uneasy about the prospect of a sharp downturn in the near term.

John Reade of the World Gold Council said, after speaking with others, "Some believe that $3,500 would be healthy for the gold market, as that is still an extremely high price. From my point of view, I certainly think that's possible." The World Gold Council sponsors a gold-backed ETF.

Currently, one issue the market faces is whether the recent retail investor interest can be sustained—in recent weeks, investors in Australia and Japan have lined up to buy small gold bars and coins.

Another unknown is the pace of central bank gold buying. Central bank gold purchases have hit a record over the past three years, but high gold prices may prompt them to slow buying. Some smaller central banks have even had to sell gold to maintain allocation ratios, since rising prices increased gold’s share of their assets.

Ruth Crowell, CEO of the London Bullion Market Association, said that gold is on a "robust upward trajectory" and is becoming a "mainstream" investment choice.

"We're seeing trading volumes rise. Mainstream investors around the world want some exposure to gold. To me, this doesn’t feel like a moment in time, but rather the beginning of a new chapter."

Risk Disclosure and DisclaimerThe market has risks; investments need caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suited to their particular circumstances. Investing accordingly is at one’s own risk. ```