Gold Collapses Into 4-Year Bear Market Despite Middle East Geopolitical Risks

Comex gold futures settled at their lowest level of the year on Thursday, marking the first time in four years they have officially entered a bear market.

Many precious metals traders find the irony striking: this downturn unfolded even as Middle East war risks intensified and investors scrambled for safer havens — a seeming rebuke to gold’s traditional safe-haven role.

Market data shows the most active August Comex gold contract plunged 3.6% on Wednesday to settle at $4,133.3 per ounce, extending losses for a fourth straight session. According to Dow Jones Market Data, the close was the lowest since November 2025.

On June 10, gold officially fell into a technical bear market, having declined 20% or more from its March peak.

Dow Jones Market Data notes it took just 91 days from the March high to enter bear territory — the fastest since the 2008 financial crisis peak. In 2008, Comex gold lost 20%+ from its top in only 23 trading days.

Chris Gaffney, President of Global Markets at EverBank, said Wednesday’s drop stemmed largely from rate dynamics: the U.S. May CPI topped 4%, leaving investors expecting the Fed’s next move to be a hike.

The U.S. Labor Department reported the unadjusted annual headline CPI rose to 4.2% in May, in line with forecasts and the highest since April 2023. This diminished near-term rate-cut expectations; markets now price a much higher chance of a 2026 hike than a cut.

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, said persistent geopolitical tensions lifted oil, keeping inflation elevated and limiting Fed easing. “That means the Fed cannot easily cut rates,” he noted. As a non-yielding asset, gold’s opportunity cost rises when rates increase.

Even with Iran-focused uncertainty, gold has failed to rally — despite its reputation as a safe haven.

Gold’s Rising Correlation with U.S. Equities

Michael Armbruster, Co-Founder and Managing Partner at Altavest, observed gold has recently moved in lockstep with U.S. stocks. Gold and Bitcoin were dumped alongside the Nasdaq during intraday sessions.

FactSet data analysis shows the correlation coefficient between gold futures and the Nasdaq 100 hit 0.91 since early June, around the Nasdaq’s peak. A reading of 1.00 means perfect positive correlation.

“Gold rose with the Nasdaq 100 early Tuesday, then sold off alongside the tech-heavy index and the S&P 500,” Armbruster said. He drew a parallel to 2008, when gold initially fell with equities but staged a lasting rally after bottoming that November.

Armbruster remains constructive longerterm: “We expected a tough June for gold, but the macro backdrop turns more bullish in H2.”

Contrary to popular belief, gold is no longer a reliable universal hedge. As MarketWatch columnist Mark Hulbert explained, no stable relationship exists between geopolitical risk and gold prices. The metal poorly hedges volatility spikes; multiple VIX surges in recent months coincided with gold selloffs.

Why Gold Is Losing Its Haven Appeal

Many analysts argue gold now acts more as a liquidity source than a refuge during stress. When risk assets falter and liquidity tightens, investors sell gold to raise cash.

Gold ETFs have lagged in the tech ETF rally. Gold’s biggest challenge is capital competition: investors shifted to AI stocks and leveraged products. Even with supportive macro conditions, gold struggles to attract inflows; it is now a preferred asset to liquidate for cash during risk-off episodes.

Technically, gold closed below its 200-day moving average late last week — the first breach in two and a half years — a key long-term trend gauge.

Ole Hansen, Head of Commodities Strategy at Saxo Bank, commented: “This is a major technical setback. Gold had been in a strong four-year uptrend, supported by central bank buying, geopolitics, fiscal debt worries, and portfolio diversification demand.”

“With U.S.–Iran tensions threatening energy supply and keeping inflation risks elevated, investors focus on higher for longer rates, not gold’s diversification role,” he added.

“In hindsight, current weakness will likely prove a good entry point,” said Christopher Louney of RBC Capital Markets.

“A post crisis multipolar world favors gold. Many bullish drivers remain, despite a temporary pause,” he added. “We see interest as cooled, not faded — this pullback could be a healthy correction.”