Shares of the Goldman Sachs Physical Gold ETF plunged -3.5% to $38.23 on November 1, as gold tumbled to its lowest price in roughly a year. Gold fell below $3,900 an ounce, touching its lowest level since October 2025, as rising energy prices and persistent inflation reinforced expectations that U.S. interest rates will remain elevated for longer. For AAAU holders — whose fund is 100% backed by physical gold bars — there is no earnings beat or product pivot that can offset the metal's slide. The price of gold is the investment.
Inflation Keeps Running Hot, and the Fed Isn't Done Tightening
The Fed raised rates by a quarter point in September to a range of 3.75%–4.00%, driven by core inflation (the PCE index, which strips out food and energy) running above 3% every month of 2026.
The central bank held steady this week, but the odds of a December hike jumped to 85% from 78% just a day earlier. Higher rates hurt gold because they raise the return investors earn on safe alternatives like Treasury bonds, making gold — which pays nothing — less attractive by comparison.
Gold Is on Track for Its Steepest Annual Drop in Over a Decade
Gold hit a record near $5,600 an ounce in January but has since collapsed to roughly $4,000. Geopolitical conflict pushed oil prices and Treasury yields higher, reducing the appeal of bullion. Gold is now on course for its steepest annual decline in 11 years.
AAAU opened 2026 at $42.55 and is now trading at $39.62 as of the recent close — a 6.9% year-to-date loss that has deepened sharply with today's session.
A December Hike Could Push Gold Even Lower
A CNBC survey of 30 fund managers and economists found 76% anticipate a rate hike at the Fed's December meeting.
Schwab expects two more rate hikes this cycle.
One forecast model projects gold averaging $3,882 to start November, with a potential low of $3,392 and an end-of-month price of $3,582 — implying another 7.7% decline. If that materializes, AAAU could slide into the mid-$30s.
The Bottom Line for Shareholders
AAAU returned -8.5% in September alone, earning a "D" grade versus its commodity-focused peers. With the Fed signaling it will keep tightening to crush inflation and oil prices adding fuel to the fire, the near-term setup for gold — and therefore AAAU — remains unfavorable. Investors seeking a safe haven may find that, in a rising-rate world, gold has temporarily lost that title.