Gold enters bear market in fastest plunge since 2008

Gold Enters Bear Market in Fastest Plunge Since 2008

Gold futures officially crossed into bear market territory on Tuesday, falling more than 20% from their early-2026 peak in just 91 trading days — the fastest such descent since the 2008 financial crisis and the first bear market for the metal since 2022.morningstar

The most active August gold contract settled at $4,133.30 an ounce on the New York Commodity Exchange, down 3.6% on the session and marking its lowest close since November 2025, according to MarketWatch.sedaily

Rising Rates, Not Geopolitics, Drive the Selloff

The primary catalyst was not the ongoing Iran conflict but a hotter-than-expected inflation report that reshaped interest rate expectations. The U.S. Consumer Price Index rose 4.2% year-over-year in May — up from 3.8% in April and the highest reading since April 2023 — with energy prices accounting for more than 60% of the monthly increase, according to the Bureau of Labor Statistics.cnbc

The inflation surge has fueled speculation about a possible Federal Reserve rate hike later this year. According to Forbes, the CME FedWatch Tool now shows a “notable likelihood” of one or two rate hikes in 2026, though markets assign a 96% probability the Fed will hold at its June 16–17 meeting. Goldman Sachs Research does not expect hikes but has pushed its next projected rate cut to June 2027.cbsnews

Rising Treasury yields and a stronger dollar have compounded pressure on gold, which yields nothing and becomes less attractive in a higher-rate environment. The metal has now fallen below its 200-day moving average for the first time in nearly three years.investopedia

Institutions Call It a Correction, Not a Trend Change

Despite the sharp drawdown, major Wall Street firms maintain bullish longer-term targets. Citi Research cut its three-month price target by $300 to $4,000 per ounce on Monday but left its six-to-12-month target at $5,000 unchanged. Goldman Sachs reaffirmed a year-end target of $5,400 per ounce, while J.P. Morgan projects $6,000 by late 2026.capital

Ed Yardeni of Yardeni Research identified $4,000 as the next key support level but maintained a target of $5,500 by year-end and $10,000 by the end of the decade, characterizing the move as a sharp correction within a broader structural bull market.investing

> “Once the situation in Iran stabilizes, gold will likely regain momentum,” Yardeni told clients in a recent note.thestreet

The selloff marks a dramatic reversal for a metal that surged more than 65% in 2025 and touched record highs near $5,600 per ounce in January.investopedia