Gold in bear market after 20% drop, risk of further decline
Gold has fallen 20% from its record high, entering a bear market. A strong dollar, higher interest rates, and the impact of the war are pressuring prices. Based on history, further declines are expected.
Gold saw a spectacular rally at the beginning of 2026, but now its momentum appears to be waning. After reaching a record high of $5,602 at the beginning of the year, gold has fallen to around $4,495, a decline of nearly 20%, a phenomenon commonly referred to as a bear market.
A series of declines after a rise
This rally in gold began in October 2022. From around $1,500 at that time, it jumped 275% by January 2026. However, a correction has now begun, and the market remains under pressure.
What does history say?
History shows that a sharp decline followed by a significant rise in gold prices is not uncommon. Mark Twain famously said, "History doesn't repeat itself, but it does resemble it."
- 1974-76: Gold rose 353%, then fell 43%
- 1980s: 541% surge followed by 52% decline
- 2011-2015: Long rally followed by a 42% decline
How much can gold fall in 2026?
If history repeats itself, gold could fall by 50% from its peak. In this scenario, prices could fall to around $2,800 or $3,000. However, many experts consider the $3,600 level to be crucial.
Why is gold under pressure right now?
Oil prices have risen since the Iran war, which has strengthened the dollar and fueled inflation.
Consequently, interest rates may remain high. Since gold pays no interest, its demand decreases during periods of high rates and a strong dollar.
Long-term hope remains
Although there is a short-term decline, experts believe that gold may strengthen again in the long term. Geopolitical tensions and central bank buying could provide support.
Advice for investors
Investing in gold for the short term can be risky. It's best to limit it to 10-15% of your portfolio and invest with a long-term perspective.
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