Investors are starting to panic that gold, which has gained more than 126% since the start of 2023, may be starting to lose its luster.
Last week, the precious metal briefly entered a bear market, with prices down more than 23% from their all-time high in January. Despite stabilizing over the past five days, gold prices continue to decline and are less than 2% away from re-entering that zone.
But many of the major trends that have driven gold’s historic rally over the past few years remain strong. That suggests the current selloff — and accompanying panic among precious metal investors — may be overblown and short-lived while offering a discounted entry point.
Is the gold bull market over?
Gold is famously a safe haven. In times of global turmoil, high inflation or stock market volatility, the precious metal has traditionally provided portfolio stability. But right now, it doesn’t behave like that.
““Gold has shown to be very sensitive this year,” said Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners. “Since the outbreak of [Iran] war, on any perceived path of the Fed’s monetary policy… gold has actually gone down in line.“
Rizzuto says that as energy prices rise and governments look to find supplies in a tighter market, many of them are forced to convert some of their gold into dollars, which explains part of the correction in the price of the precious metal.
Another catalyst for the current selloff comes from the oil producers themselves. Countries in the Middle East have been hit hard by oil revenues flowing into their gold reserves as a temporary means of financing ongoing spending, according to Rizzuto.
Other factors come into play, too. As the stock market continues to set record highs, equities offer an attractive alternative for investors. Meanwhile, the US dollar remains down about 11% since the start of President Donald Trump’s second term, but the greenback has recouped some of those losses and gained. about 4% since February. Since gold is pegged to the US dollar, its strong performance could end global gold purchases.
“I think it’s moral after seeing years of racing,” Rizzuto says. “And if you look at the long term [price] chart going back at least to the early ’70s, during the country’s major gold bull markets, a 20% correction is within reasonable expectations.”
What feels different this time is the rate at which prices have fallen. During gold’s previous bear market in 2022, it took 282 days for prices to drop 25%. But this year, since the rise of gold in Jan. 29, it took just 91 days to drop 20% – the fastest the precious metal has fallen in a bear market since 2008 and the Great Financial Crisis. That, however, does not suggest that lower price action is imminent.
“When we got gold in the 1970s, we saw a correction of about 30% and then in the late ’70s, about 46%, and gold went on to have a lot of recovery after that,” Rizzuto said. “This looks like a correction. So is the story of the gold bull market over? We certainly don’t think so.”
As gold takes a breather, its main price driver remains strong
Rizzuto shares those sentiments with major investment banks. After reaching a high of $5,608.35 per troy ounce, gold is currently trading around $4,266. But JPMorgan Chase and Wells Fargo are keeping their year-end price targets in the $6,000 to $6,300 range, while Goldman Sachs is forecasting $5,400.
Even Morgan Stanley’s more conservative forecast of $4,800 to $5,200 per troy ounce by the end of 2026 suggests about a 22% potential upside to the current price of gold. That could indicate that the big banks think we haven’t seen a bull market yet, according to Rizzuto.
“If you look at the long-term drivers of gold, they seem to be there,” he said. “And if you look at historical comparisons, we seem to be in a very different situation today than we were in the previous gold peaks.”
One of those drivers is inflation. After the consumer price index (CPI) reached a post-pandemic low of 2.3% in April 2025, the metric has been growing slowly ever since. Most recently, that increase is due to the fallout from the Iran war.
Despite the framework for ending the existing conflict, the instability of the country in the Middle East is likely to continue, and so will the high costs.
“Uncertainty raises the possibility that higher rates will stick around longer,” Rizzuto said.
Those price impacts are already beginning to show. In May, the consumer price index reached 4.2% – its highest reading in three years – largely due to a 23.5% year-on-year increase in energy prices. Higher inflation can strengthen the prices of precious metals, gold, silver, platinum and palladium historically act as hedges against a fall in fiat currency.
In the near term, more volatility in the price of the precious metal should be expected. But the golden thesis of long-term investing still exists.
“Gold is like any commodity – it’s a very volatile commodity. And while this may not be the top of this bull cycle, we can certainly continue to see more volatility in price discovery in the coming months,” Rizzuto said. “So when we say the story is complete, we’re talking about the big picture, a ten-year vision.”
