On June 24, 2026, spot gold fell below the key $4,000 per ounce threshold during intraday trading, hitting a low of $3,958.81 per ounce—the first time since November 2025 that this critical psychological level was breached. In early Asian trading on June 25, gold prices continued their downward momentum, dropping to $3,978.11 per ounce. Since reaching a record high near $5,600 per ounce at the end of January this year, gold has pulled back about 29%, officially entering a technical bear market.
During the same period, Hong Kong-listed gold stocks also suffered sharp declines. Shandong Gold (01787) is currently trading at $17.77, opening down 7% and plunging nearly 70% from its all-time high of $54.45 in February this year. The simultaneous plunge in gold prices and gold mining stocks has prompted the market to question whether the three-year bull run in precious metals has come to an end.
Why Has Gold Fallen Nearly 30% From Its All-Time High in Just Six Months?
The core driver behind this round of gold’s correction is the market’s repricing of the US interest rate outlook. Newly appointed Federal Reserve Chair Walsh sent a clear hawkish signal at his first policy meeting, leading markets to price in the possibility of further rate hikes before year-end. US Treasury yields remain elevated, and the US Dollar Index has rebounded to a 13-month high, approaching the 102 level.
For gold, which does not yield interest, a high-rate environment significantly raises the opportunity cost of holding it—capital naturally flows toward yield-generating assets like Treasuries. ING analysts point out that the primary catalyst for gold’s recent decline is the sharp reassessment of rate expectations. Meanwhile, expectations for Fed rate cuts this year have virtually disappeared. Goldman Sachs has lowered its year-end 2026 gold target by $500 to $4,900 per ounce, while Deutsche Bank has cut its Q3 and Q4 gold forecasts to $4,300 and $4,800 per ounce, respectively, with some projections slashing more than 20%.
How a Stronger Dollar and Waning Safe-Haven Demand Are Creating a Double Headwind
The strengthening US Dollar Index has become the immediate trigger for gold’s decline. As the dollar hits a 13-month high, gold priced in dollars becomes more expensive for holders of other currencies, naturally dampening demand. The dollar’s strength is no accident—since the Fed’s hawkish turn, expectations for a rate hike in July or September have surged, with the probability of a September hike now around 66%.
On the geopolitical front, the preliminary peace agreement between the US and Iran is easing geopolitical risk premiums. Brent crude prices have dropped more than 3%, and US crude has fallen below $70 per barrel. Lower oil prices have alleviated inflation concerns, weakening gold’s appeal as an inflation hedge. The geopolitical risk premium and inflation-hedging demand that previously supported gold prices are both fading.
What Do Persistent Gold ETF Outflows and Weak Physical Demand Signal?
Capital flows are also turning cautious. According to the World Gold Council, global gold ETFs saw outflows of about $2 billion in May, with total assets under management down 2% month-over-month to $604 billion. Deutsche Bank data also shows continued net outflows from gold ETFs, reflecting a clear decline in traditional asset allocators’ interest in gold.
Physical demand remains lackluster as well. Although domestic mainstream gold jewelry prices have retreated by more than 460 yuan/gram from their early-year highs, the offline market has not seen the expected bargain-hunting. Driven by a "buy the rally, not the dip" mentality, most consumers are holding onto cash and waiting. Several gold retailers report that even with promotions like weight discounts and waived processing fees, in-store traffic and actual sales remain subdued. The combination of ETF outflows and sluggish consumer demand is creating a double drag, intensifying downward pressure on gold prices.
How Is Gold’s Weakened Safe-Haven Status Changing Cross-Asset Pricing Logic?
A notable structural shift is underway: gold’s traditional safe-haven role is diminishing. Economist Robin Brooks notes that the correlation coefficient between gold and the S&P 500 has climbed above 0.50, a sharp contrast to its historically near-zero relationship. This level is close to Bitcoin’s performance during the "currency debasement trade" from late 2025 to early 2026, when BTC’s correlation with equities briefly hit around 0.55.
A correlation above 0.50 means that during risk-off periods, gold is now more likely to fall in tandem with stocks, significantly undermining its traditional hedging function. Brooks attributes this change to gold’s rapid rally in 2025 and the influx of new retail investors—who react more quickly under market pressure than the long-term holders of physical gold in previous cycles. The increasing synchronization between gold, US equities, and Bitcoin is reshaping the foundational assumptions behind major asset allocation.
Shandong Gold Drops Nearly 70% From Its High: Why Are Gold Stocks Overreacting?
While gold has pulled back about 30%, Shandong Gold’s share price has plunged from $54.45 to $17.77—a drop of nearly 70%. This "overshoot" reflects deep market concerns about the earnings outlook for gold mining companies.
The market’s bearish stance on gold stocks centers on the view that renewed Fed rate hikes will keep gold prices under pressure, dragging down corporate performance. Shares of Shandong Gold, Zijin Mining International, and Zhaojin Mining on the Hong Kong exchange have all fallen by nearly 60%, pricing in the expected impact of rate hikes. Furthermore, despite year-over-year net profit growth for several precious metals companies in Q1 2026, share prices have diverged from fundamentals, with Shandong Gold’s decline even outpacing the industry average.
As of May 29, Shandong Gold’s A-shares had dropped 55.96% from their late-January high. From a valuation perspective, Shandong Gold was already in a "historically high, expectation-overshot" sensitive range in February 2026, and the current price correction is, in part, a repricing of prior overvaluation. The continued slide in Hong Kong-listed gold miners—Shandong Gold and China Silver Group each down 5%—has pushed most stocks to new lows for the year.
Can Central Bank Gold Buying Provide a "Ballast" for the Market?
Amid a confluence of bearish factors, central bank gold purchases have become the market’s most solid source of support. According to the latest data, global central bank net gold buying hit a one-year high in Q1 2026, with many central banks continuing to add to their reserves. Deutsche Bank’s latest report bluntly states that central bank demand is now "the only still-solid pillar" in the gold market.
World Gold Council data shows that in April 2026, global central bank net gold purchases totaled 19 tons, with Eastern European and Asian central banks leading the way and maintaining a steady pace. Estimates suggest that global central bank gold buying in 2026 will remain at the relatively high levels seen in 2025. Against the backdrop of high US federal debt and long-term erosion of dollar credibility, central banks worldwide may continue to strategically reallocate assets into gold.
This means that while speculative capital outflows, ETF reductions, and slowing consumer demand are weighing on gold prices, official reserve demand is temporarily preventing a deeper collapse. The tug-of-war between structural central bank buying and speculative selling will be a key variable shaping gold’s medium-term trajectory.
Has Gold’s Three-Year Bull Market Come to an End?
Over the past three years, gold has posted double-digit annual gains, doubling in price. A combination of central bank buying, global rate-cut expectations, concerns about the dollar’s credibility, and geopolitical tensions made gold one of the world’s most sought-after assets. However, with the Fed’s policy outlook shifting sharply, the dollar strengthening, and geopolitical risks easing, the core drivers that previously fueled gold’s rally are now facing real challenges.
Recently, several Wall Street institutions have sharply lowered their gold price targets—Goldman Sachs, Deutsche Bank, Citi, and Morgan Stanley have all turned more cautious. Goldman Sachs slashed its year-end target by $500 to $4,900 per ounce. The market is now re-examining a crucial question: has gold’s three-year super bull market come to an end?
Still, some argue that the current downturn is a medium-term structural adjustment, not the end of the long-term trend. As global central banks continue to diversify their reserve assets, there is still some support for gold’s medium- and long-term demand. The battle around the $4,000 level is essentially a contest between short-term macro headwinds and long-term structural demand.
Summary
Gold has fallen from its all-time high of $5,598 to below $4,000, a nearly 30% decline, officially entering a technical bear market. The main drivers of this correction are the Fed’s hawkish pivot, a stronger dollar, fading geopolitical risk premiums, and ongoing ETF outflows. The rising correlation between gold, US equities, and Bitcoin has further weakened gold’s traditional role as a safe-haven asset.
Shandong Gold’s share price has plunged from $54.45 to $17.77—a drop of nearly 70%, far exceeding the decline in gold itself. This overshoot reflects deep concerns about gold miners’ earnings prospects and the unwinding of previous valuation bubbles.
With short-term macro headwinds still in play, central bank gold buying remains the market’s firmest support. The tug-of-war around the $4,000 level is fundamentally a battle between short-term rate expectations and long-term structural demand. Whether or not the three-year bull market has ended, the market is undergoing a profound re-pricing logic reset.
FAQ
Q1: What are the main reasons gold fell below $4,000?
This round of gold’s decline is the result of multiple factors: the Fed’s hawkish signals, renewed rate hike expectations, the US Dollar Index hitting a 13-month high, elevated US Treasury yields, easing geopolitical tensions reducing safe-haven demand, and continued outflows from gold ETFs.
Q2: Why did Shandong Gold’s share price drop much more than the gold price itself?
While gold has pulled back about 30% from its high, Shandong Gold has dropped nearly 70%. This overshoot is mainly due to market concerns that ongoing Fed rate hikes will keep gold prices under pressure, hurting gold miners’ earnings. Additionally, Shandong Gold’s valuation in February 2026 was at a "historical high, expectation-overshot" sensitive range, so the price correction is a repricing of prior overvaluation.
Q3: Has gold’s traditional safe-haven role disappeared?
The correlation between gold and the S&P 500 has risen above 0.50, a stark contrast to its historically near-zero relationship. This means that during risk-off periods, gold is now more likely to fall alongside equities, significantly weakening its traditional hedging role.
Q4: Can central bank gold buying support gold prices?
In Q1 2026, global central bank net gold purchases hit a one-year high. Deutsche Bank points out that central bank demand is now "the only still-solid pillar" in the gold market. With high US federal debt and eroding dollar credibility, global central banks may continue to strategically allocate into gold.
Q5: Has gold’s long-term trend reversed?
There is disagreement in the market. Institutions like Goldman Sachs and Deutsche Bank have lowered their gold price forecasts. However, some believe the current sell-off is a medium-term structural adjustment, not the end of the long-term trend. Ongoing diversification of central bank reserves still provides medium- and long-term support for gold.
