Wall Street’s AI Selloff Sends a Warning. Could Gold Be Next to Benefit?

Wall Street suffered its sharpest selloff in months on Thursday, with the Nasdaq plunging 5.5%, the S&P 500 falling 4.4% and the Dow losing more than 1,800 points. Investors are increasingly questioning whether the massive spending behind the AI boom can deliver the returns expected.

The sudden shift in sentiment could give gold another source of support.

As investors reduce exposure to riskier assets, demand for traditional safe havens may increase. More importantly, US Treasury yields have come under pressure as markets turn defensive. Lower yields reduce the opportunity cost of holding gold, while a weaker US dollar would provide an additional boost.

Gold has already shown signs of recovery, rising around 1% on Thursday to settle near $4,102.50 an ounce, after climbing to a two-week high earlier in the session.

But the rally may not be straightforward.

If the stock selloff deepens, investors facing losses could sell gold to raise cash, creating short-term pressure on bullion. The direction of Treasury yields and the dollar will therefore matter as much as equity market sentiment.

For gold traders, the key question is whether Wall Street's latest turmoil triggers a sustained flight to safety — or another scramble for liquidity.