Within just 91 days, gold He went through the historically high in bear market – that is, he recorded a drop of more than 20% – in the faster dive of this magnitude since the 2008 global financial crisis.
The precious metal, which for decades is considered the absolute safe haven in times of turmoil, has not been able to benefit from it either. Middle East war Nor by geopolitical uncertainty. On the contrary, investors turn massively towards US government bonds, which now offer returns that gold is unable to compete with.
This development is surprising to many investors, as gold is historically favoured in times of geopolitical tension. This time, however, the market has its eye mainly on inflation And at US interest rates.
The fastest dive since 2008
The August contract retreated Wednesday by 3.6%, or $153.10, closing at $4.133.30 per ounce, at the lowest level since November 2025.
Based on Dow Jones Market Data data, gold only took 91 days to lose more than 20% of its value from its recent highs.
The picture is far from that of the first weeks of the year. On 29 January gold had touched the historic high of $5,354,80 per ounce, recording a rise of over 23% since the beginning of 2026.
Inflation changes the data
Behind the great correction is the change in the expectations of the Federal Reserve's monetary policy. Annual inflation in the US accelerated in May to 4.2% from 3.8%, reaching the highest level since 2023. This development led investors to the conclusion that the American central bank will hardly proceed to interest cuts soon.
On the contrary, markets are beginning to anticipate the possibility that interest rates will remain high for a longer period or even increase further if inflationary pressures persist.
Bond odds push gold
This change was directly reflected in the government bond market. Investors went on to sell securities, resulting in bond prices retreating and their returns moving higher. The American 30-year bond performance exceeded 5%, while the 10-year performance was formed close to 4.55%.
For gold, the rise in yields is a negative development. As valuable metal does not offer interest or other cash flow, its holding becomes less attractive when investors can secure higher returns than state titles.
In other words, it is increasing «opportunity cost» investment in gold.
War does not function as a prop
Even more impressive is the fact that the escalation of the conflict between the US and Iran failed to support gold prices.
Traditionally, geopolitical crises strengthen demand for safe shelters. However, investors seem to be more concerned about the effects of war on inflation and interest rates than about geopolitical risk itself.
The rise in oil prices, associated with tension in the Middle East, strengthens concerns that inflation will remain high for a longer period of time, creating an environment that is unfavourable to gold.
Moves along with shares
Analysts observe that gold last shows behavior reminiscent of more high risk energy than traditional safe haven.
According to data invoked by MarketWatch, the correlation between gold and Nasdaq has reached 0.91 since early June, which means that the two markets move almost parallel.
As some analysts point out, a similar phenomenon had been observed during the 2008 financial crisis, when gold initially retreated along with the shares before a multi-annual upward course.
Opportunity or warning?
Despite violent correction, several fund managers do not consider the long-term investment history of gold to be over.
They argue that precious metal still acts as a counterbalance against extreme events and systemic risks, while they estimate that a stabilization of inflation or a change of attitude by Federal Reserve could restore investor interest.
At present, however, the market sends a different message: even in a period of war and geopolitical uncertainty, interest rates and inflationary expectations remain the dominant factors determining the course of gold.
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