Gold breaks below $4,000 mark, Hong Kong-listed gold stocks plunge: Is the precious metals bull market over or is it a mid-term adjustment?

On June 24, 2026, spot gold briefly broke below the key psychological level of $4,000 per ounce during intraday trading, hitting a low of $3,958.81 per ounce, the first time it has fallen below this level since November 2025. In early Asian trading on June 25, gold continued its downward momentum to $3,978.11 per ounce. Since its record high of nearly $5,600 per ounce at the end of January this year, gold has retreated approximately 29%, officially entering a technical bear market.

During the same period, the Hong Kong-listed gold sector also suffered heavy losses. Shandong Gold (01787) is currently trading at $17.77, down 7% at the open, representing a decline of nearly 70% from its historical high of $54.45 in February this year. The simultaneous crash in gold prices and gold stocks has sparked deep market questioning about whether the three-year bull market in precious metals has ended.

Why Has Gold Fallen Nearly 30% from Its Record High in Six Months?

The core driver of the current gold correction comes from the market's repricing of the U.S. interest rate path. Newly appointed Fed Chairman Warsh sent clear hawkish signals at his first FOMC meeting, prompting the market to begin repricing the possibility of further rate hikes before year-end. U.S. Treasury yields remain elevated, and the U.S. dollar index has rebounded to a 13-month high, approaching the 102 mark.

For gold, which generates no interest income, a high-interest-rate environment means a significant increase in holding costs—capital tends to flow to yield-bearing assets like Treasuries. ING analysts point out that the primary driver of gold's recent decline is precisely this significant repricing of rate expectations. Meanwhile, expectations of a Fed rate cut this year have largely vanished. Goldman Sachs has lowered its year-end 2026 gold target by $500 to $4,900 per ounce; Deutsche Bank has cut its Q3 and Q4 gold price forecasts to $4,300 and $4,800 respectively, with some cuts exceeding 20%.

How Are a Stronger Dollar and Cooling Safe-Haven Demand Creating Dual Pressure?

The strengthening of the U.S. dollar index has become the direct catalyst crushing gold. When the dollar rises to a 13-month high, gold priced in dollars becomes more expensive for holders of other currencies, naturally suppressing demand. The dollar's strength is no accident—since the Fed's hawkish signals, market expectations for a rate hike in July or September have significantly heated up, with the probability of a September hike now rising to around 66%.

On the geopolitical front, the preliminary peace agreement between the U.S. and Iran is releasing geopolitical risk premiums. Brent crude oil has fallen more than 3%, and U.S. crude has broken below $70 per barrel. The drop in oil prices has eased market concerns about inflation and also weakened gold's appeal as an inflation hedge. The geopolitical conflict premium and inflation-hedging demand that previously supported gold's rise are now fading simultaneously.

What Signals Do Continued Gold ETF Outflows and Weak Physical Consumption Send?

Signals from fund flows are also turning cautious. According to data from the World Gold Council, global gold ETFs saw outflows of approximately $2 billion in May, with total assets under management falling 2% month-over-month to $604 billion. Data from Deutsche Bank also shows sustained net outflows from gold ETFs, reflecting a marked decline in interest from traditional allocation investors.

Physical consumption has also failed to pick up. Although prices of mainstream domestic gold jewelry brands have cumulatively retreated more than 460 yuan per gram from their early-year highs, the offline market has not seen the expected bargain-hunting activity. Dominated by the "buy on rising, not on falling" sentiment, most consumers are choosing to wait and see. Multiple gold retailers report that even with promotional measures such as per-gram discounts and fee waivers, foot traffic and actual transactions remain low. ETF outflows and weakening consumption demand form a dual pressure, exacerbating the downward pressure on gold prices.

How Does the Weakening of Gold's Safe-Haven Attribute Affect Cross-Asset Pricing Logic?

A noteworthy structural change is that gold's traditional safe-haven attribute is weakening. Economist Robin Brooks points out that the correlation coefficient between gold and the S&P 500 index has risen above 0.50, in stark contrast to its historical state of near-zero correlation. This level is close to the performance of Bitcoin during the "currency debasement trade" period from late 2025 to early 2026, when BTC's correlation with stocks once rose to about 0.55.

A correlation coefficient above 0.50 means that during risk-off periods, gold is more likely to fall together with stocks, significantly weakening its traditional hedging role. Brooks attributes this change to the sharp rise in gold prices in 2025 and the influx of a new wave of retail investors—who react more quickly during market stress, fundamentally different from the long-term investors who held physical gold in earlier years. The synchrony of gold with U.S. stocks and Bitcoin is changing the basic assumptions of asset allocation across major categories.

Shandong Gold Down Nearly 70% from Its High: Why Gold Stocks Are Overshooting

Gold has retreated about 30%, but Shandong Gold's stock price has fallen from $54.45 to $17.77, a drop of nearly 70%—the adjustment in gold stocks far exceeds that of gold itself. This "overshooting" phenomenon reflects deep market concerns about the profit outlook for gold mining companies.

The core logic behind the market's bearish view on gold stocks is that the Fed's resumption of rate hikes will continue to suppress gold prices, thereby dragging down the performance of gold companies. Shandong Gold's Hong Kong-listed shares, Zijin Gold International, and Zhaojin Mining's Hong Kong-listed shares have all fallen by nearly 60%, with stock prices digesting rate hike expectations. Additionally, although many precious metals listed companies saw year-on-year growth in net profit attributable to parent companies in Q1 2026, stock prices have diverged from fundamentals, with Shandong Gold's decline even exceeding the industry average.

As of May 29, Shandong Gold's A-shares had retreated 55.96% from their year-to-date high at the end of January. From a valuation perspective, in February 2026, Shandong Gold was already in a sensitive zone of "historical highs and overpriced expectations," and the current stock price correction is, to some extent, a correction of earlier overpricing. Hong Kong-listed gold stocks continue their downtrend, with Shandong Gold and China Silver Group falling 5%, and most individual stocks hitting new yearly lows.

Can Central Bank Gold Purchases Become the "Ballast" for the Gold Market?

Amid the interweaving of many bearish factors, central bank gold demand has become the most solid support for the gold market. According to the latest data, global central bank net gold purchases in Q1 2026 hit a new high in over a year, with many central banks continuing their trend of increasing holdings. Deutsche Bank stated bluntly in its latest report that central bank demand is now the "only remaining solid pillar" for the current gold market.

Data from the World Gold Council shows that global central banks net purchased 19 tons of gold in April 2026, with central banks in Eastern Europe and Asia remaining the main buyers, maintaining a steady pace of increases. It is estimated that global central bank gold purchases in 2026 will remain at a high level comparable to 2025. Against the backdrop of high U.S. federal debt and long-term erosion of dollar credit, the strategic reallocation of assets into gold by global central banks is likely to continue.

This means that although speculative capital outflows, ETF reduction, and slowing consumer demand are suppressing gold prices, official reserve demand has temporarily prevented a deeper collapse in gold. The tug-of-war between this structural force of central bank gold purchases and speculative selling will be the key variable determining the medium-term trend of gold.

Has the Three-Year Bull Market in Gold Reached Its End?

Over the past three years, gold has recorded double-digit annual gains, doubling in price. A confluence of factors—central bank gold purchases, global rate cut expectations, dollar credit concerns, and geopolitical conflicts—drove gold to become one of the most sought-after assets globally. However, with a sharp shift in Fed policy expectations, a persistently strengthening dollar, and easing geopolitical tensions, the core logic supporting gold's rise is facing substantial challenges.

Several Wall Street institutions have recently intensively lowered their gold price targets—Goldman Sachs, Deutsche Bank, Citigroup, and Morgan Stanley have all turned cautious. Goldman Sachs cut its year-end gold price target sharply by $500 to $4,900 per ounce. The market is beginning to reexamine a key proposition: has gold's three-year super bull market reached its end?

However, some believe that this sharp decline is a medium-term structural adjustment rather than the end of a long-term trend. With the continued diversification of global central bank reserve assets, gold still has some medium-to-long-term demand support. The battle around the $4,000 level for gold is essentially a struggle between short-term macro headwinds and long-term structural demand.

Summary

Gold has fallen from its record high of $5,598 to below $4,000, a retreat of about 30% from the peak, officially entering a technical bear market. The core drivers of this adjustment come from a confluence of factors: the Fed's hawkish shift, a stronger dollar, fading geopolitical risk premiums, and sustained outflows from gold ETFs. The rising correlation between gold, U.S. stocks, and Bitcoin has further weakened its traditional safe-haven asset positioning.

Shandong Gold's stock price has fallen from $54.45 to $17.77, a decline of nearly 70%, far exceeding the magnitude of the gold price retreat. This overshoot reflects deep market concerns about the profit outlook for gold mining companies and the concentrated release of earlier valuation bubbles.

Against the backdrop of short-term macro headwinds that have not yet dissipated, central bank gold demand remains the most solid support for the gold market. The battle around the $4,000 level is essentially a tug-of-war between short-term interest rate expectations and long-term structural demand. Regardless of whether the three-year gold bull market has reached its end, the current market is undergoing a profound restructuring of pricing logic.

FAQ

Q1: What are the main reasons for gold falling below $4,000?

The current decline in gold is the result of multiple factors converging: the Fed's hawkish signals, the market repricing rate hike expectations, the dollar index rising to a 13-month high, elevated Treasury yields, easing geopolitical tensions reducing safe-haven demand, and sustained outflows from gold ETFs.

Q2: Why has Shandong Gold fallen much more than the gold price?

Gold has retreated about 30% from its peak, while Shandong Gold has fallen nearly 70% from its high. This overshoot is mainly due to market concerns that the Fed's rate hikes will continue to suppress gold prices, thereby dragging down the performance of gold companies; additionally, in February 2026, Shandong Gold's valuation was in a sensitive zone of "historical highs and overpriced expectations," and the stock price correction is a correction of earlier overpricing.

Q3: Has gold's traditional safe-haven attribute disappeared?

The correlation coefficient between gold and the S&P 500 index has risen above 0.50, significantly different from its historical state of near-zero correlation. This means that during risk-off periods, gold is more likely to fall together with stocks, and its traditional hedging role is being notably weakened.

Q4: Can central bank gold purchases support gold prices?

Global central bank net gold purchases in Q1 2026 hit a new high in over a year. Deutsche Bank points out that central bank demand is the "only remaining solid pillar" for the current gold market. Against the backdrop of high U.S. federal debt and eroding dollar credit, the strategic allocation of gold by global central banks is likely to continue.

Q5: Has the long-term trend of gold reversed?

There is disagreement in the market. Institutions such as Goldman Sachs and Deutsche Bank have lowered their gold price expectations. However, some believe that this sharp decline is a medium-term structural adjustment, not the end of a long-term trend, and the diversification of global central bank reserve assets still provides medium-to-long-term support for gold.