Gold rebounds 1% but needs $4,000 for a stabilisation signal

Spot gold rose about 1% in Asian trading, briefly returning to $3,915 per ounce, after a 6.5% fall in October that was the largest monthly drop since 2008, according to BigGo Finance.

Justin Lin of Global X ETFs said about 150 tonnes of ETF inflows since mid-July are now under water, creating a risk of "negative assets" if pressure continues.

Ole Sloth Hansen, head of commodity strategy at Saxo Bank, said gold must climb back above $4,000 before its short-term outlook can return to neutral, after losing that level in the recent selloff. OCBC, meanwhile, sees fading recovery momentum and limited new buying.

The situation leaves investors between buying opportunities at low levels and the risk of a continued correction, until a stabilisation signal above $4,000 becomes clear.

What do these terms mean?

Exchange-traded funds: Investment funds that trade on an exchange like shares and can track the price of a commodity such as gold instead of buying the metal itself.

Negative assets: Investment positions that keep incurring losses and pressure the investor to sell, especially if the price falls further below the purchase price.

Correction: A temporary fall in an asset's price after a large rise, usually used to describe a decline of between 10% and 20%.

$4,000 level: A psychological and technical price level watched by traders, whose recovery is seen as a sign of improving momentum.