Gold in Bear Market, Down 21% From January Record
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- Spot gold fell another 0.1% to $4,400 per ounce on Tuesday, extending a 21% decline from its record high of $5,594.82 reached at the end of January and a nearly 10% drop last week — its worst weekly showing since September 2011.
- The U.S. dollar index rose 0.5% on the day and has strengthened roughly 3% since the start of the war, making greenback-priced bullion more expensive for foreign holders and compounding the selling pressure.
- The 10-year Treasury yield climbed about 5 basis points to 4.384%, denting gold's appeal as a non-interest-bearing asset as traders dial back expectations for aggressive Federal Reserve rate cuts amid persistent inflation.
- Standard Chartered's Rajat Bhattacharya said the pullback mirrors a familiar pattern during market stress, with investors raising cash to cover margin calls and booking profits after gold's initial safe-haven surge at the start of the Iran conflict.
- eToro's Zavier Wong framed the sell-off as inevitable position unwinding after a 64% rally last year, noting that the record run was driven more by "fiscal deficits, geopolitical fragmentation, and central banks quietly diversifying away from dollar reserves" than by inflation.
- Long-term industry watchers maintain a constructive outlook, arguing that structural drivers — geopolitical risk, fiscal concerns, and ongoing central bank demand — continue to underpin gold's bull case even as the short-term tape turns bearish.
Why it matters: Gold's 21% drawdown from $5,594.82 to $4,400 formally puts it in bear market territory, and the worst weekly loss since 2011 signals leveraged funds and institutional investors are aggressively unwinding positions. The decisive factor is macro: a 3% dollar rally since the war began and 10-year yields near 4.384% have stripped gold of its safe-haven bid, even though the structural thesis — central bank diversification and fiscal stress — that fueled last year's 64% rally remains intact.
