Gold falls below $4,000: three-year bull run ends, why has the safe-haven logic completely failed?

On the evening of June 24, 2026, spot gold broke below the $4,000 per ounce integer mark during intraday trading for the first time since November 2025. In early Asian trading on June 25, the price continued its pullback, falling to a low of $3,959.35 per ounce. From the record high of around $5,600 set in January this year, the cumulative drawdown in gold has now exceeded 20%, officially confirming a technical bear market.

Over the past three years, gold has recorded double-digit gains every year, with its price more than doubling. Driven by central banks, asset management institutions, and retail investors, gold at one point became one of the strongest-performing major asset classes globally. Now that the $4,000 level has been lost, the three-year bull market has come to an abrupt end.

Why Did Gold Prices See a “Cliff-Like” Plunge in June 2026?

The immediate trigger for this round of gold price declines is the concentrated release of multiple negative factors within the same time window.

After the Federal Reserve’s June monetary policy meeting, market expectations for the interest-rate path underwent a fundamental reversal. Fed Chair Kevin Warsh placed price stability above all else in his first press conference. Of the 19 officials, 9 expected at least one rate hike by the end of the year. CME FedWatch data showed that the probability of a September rate hike priced by traders surged from 29% a week earlier to 68%. Market expectations rapidly shifted from rate cuts earlier in the year to the possibility of multiple rate hikes within the year.

Meanwhile, the U.S. dollar index surged sharply. On June 24, the dollar index hit a 13-month high of 101.80; on June 25 it closed at 101.611. The dollar index has risen by about 2.8% this month and is on track for its largest monthly gain in nearly a year. A stronger dollar directly weighs on precious metal assets denominated in the U.S. currency, and with U.S. Treasury yields staying elevated, the opportunity cost of holding gold—as a non-yielding asset—has risen sharply.

On the geopolitical front, the 60-day negotiation window between Iran and the United States has helped Middle East geopolitical risks ease temporarily, causing the safe-haven premium for precious metals to keep narrowing. With multiple pressures stacking up, gold repeatedly lost key support levels—falling below $4,500, $4,200, $4,100, and then $4,000 within just a few weeks.

From 5,600 to 3,959: How the Gold Bull Market Was Broken Down Step by Step

Looking back at the full trajectory of this gold bull market, the price action clearly shows three phases.

First phase: accelerated surge to the peak (March 2024 to January 2026). This leg of the gold rally started in March 2024. Gold rose by about 27% for all of 2024 and by about 64% in 2025. In January 2026, gold gained about 29% again on a monthly basis, reaching a record high of $5,598.88 per ounce on January 29. The continuous advance gradually formed a near-inescapable market consensus: gold would not fall.

Second phase: collapse at high levels (late January 2026). On January 30, spot gold plunged more than 12% in a single day, breaking below $4,700 intraday and suffering the largest one-day drop in 40 years. That crash—coinciding with Warsh’s nomination as Fed Chair—was the market’s “vote” via prices: Warsh’s hawkish credibility was taken seriously from the start.

Third phase: sustained downward trend (February to June 2026). After a period of consolidation at highs in February, gold prices kept sliding in March, April, and May. On June 10, gold fell below the 200-day moving average for the first time in two and a half years. On June 11, it broke below $4,100. On June 24, the $4,000 level was breached.

From the historical high to $3,959, the pullback is about 30%. This decline not only meets the technical definition of a bear market in terms of magnitude, but also, in terms of time, signals the formal end of the three-year uptrend.

What Does the Synchronized Plunge in Gold and Bitcoin Reveal About Market Rules?

One signal worth high attention is the high degree of synchronicity between gold and bitcoin during this selloff.

From June 24 to 25, bitcoin also broke below $60,000 in tandem for the first time since late 2024. Bitcoin slid from around $66,000 before the decision was released. The synchronized plunge in gold and bitcoin marks the accelerating unwinding of the “dollar debasement trade,” which has been popular in the market for about two years.

The logic behind the “dollar debasement trade” was built on concerns about fiscal profligacy and central banks tolerating inflation—investors bet that currency depreciation would push hard assets higher. After Warsh took office, he emphasized a return to anti-inflation orthodoxy, fundamentally shaking the core narrative of this trade. When the market becomes convinced that the Fed will seriously fight inflation rather than tolerate it eroding debt, the valuation premium of gold and bitcoin as “debasement hedges” is compressed all at once.

This pattern reveals the key contradiction in today’s market: it’s not that safe-haven demand has disappeared, but that the preferred choice of safe-haven capital has changed. Dollar assets can both provide a safe haven and generate returns; gold can provide a safe haven but pays no interest. When the market re-prices rate hikes, capital naturally prefers to return to the dollar. The synchronized drop in gold and bitcoin is essentially the simultaneous mapping of the same macro narrative reversal across different asset classes.

Is the Negative Correlation Between the Dollar Index and Gold Being Strengthened?

Based on historical data, the dollar and gold typically exhibit a negative correlation. In this cycle, that relationship has been pushed to the extreme.

As of June 25, the dollar index closed at 101.611, a 13-month high. Spot gold closed at $3,990.3 per ounce, its lowest closing level since November 2025. The monthly gain in the dollar index and the monthly decline in gold form a clear mirror relationship.

There are three core mechanisms driving this strengthened negative correlation:

First, the pricing effect. Gold is priced in U.S. dollars. A stronger dollar means reduced purchasing power for non-dollar currencies, directly suppressing physical demand.

Second, the substitution effect. U.S. Treasury yields remain elevated. U.S. dollar assets provide both safe-haven functionality and yield returns, making gold relatively less attractive.

Third, capital flows. A stronger dollar attracts international capital back to the United States, and gold ETFs continue to see redemptions. On June 23, SPDR—the world’s largest gold ETF—cut its holdings by more than 4.5 tonnes in a single day; prior to that, cumulative outflows had exceeded 58 tonnes over the previous four consecutive weeks.

The current strength of the dollar index is not a short-term fluctuation, but a structural result of the shift in Federal Reserve policy expectations. As long as rate hike expectations have not been fully priced in, the negative correlation between the dollar and gold is likely to keep strengthening.

Can Global Central Banks’ Gold Reserve Increases Provide a Floor for Gold Prices?

Against the backdrop of global central banks continuing to push forward with a “de-dollarization” strategy, central banks buying gold has been one of the most important structural supports for gold’s rise over the past three years.

By the end of 2025, the share of gold in global official reserve assets rose to 27%, surpassing the 22% share of U.S. Treasuries, making it the largest asset in global official reserves. In 2025, global central banks’ gold purchases totaled 863 tonnes, far above the annual average of 473 tonnes from 2010 to 2021. By the end of March 2026, total global central bank gold reserves reached 3.7 ten thousand tonnes.

However, whether central bank gold buying can effectively support gold prices at current levels is subject to several key constraints:

First, the pace of purchases may slow. A fall in gold prices may slow the global central bank gold buying trend—some central banks that added large amounts at high levels are now sitting on losses.

Second, some central banks have started to reduce holdings. Since the outbreak of the Iran War in 2026, Turkey has sold or lent 130 tonnes of gold. Central banks are not a monolithic bloc of net buyers.

Third, there is a disconnect between physical buying and financial pricing. Deutsche Bank pointed out that the discount of China’s onshore gold price versus New York Comex gold implies that China’s import demand cannot provide effective support for international gold prices.

From a medium- to long-term perspective, nearly 90% of central banks expect to continue increasing their gold reserves over the next 12 months. But central bank gold buying is a strategic allocation behavior, and it has relatively low sensitivity to short-term price fluctuations. In a macro environment dominated by expectations of rate hikes, physical buying is difficult to offset the concentrated withdrawal of financial capital.

Why Has Gold’s Safe-Haven Property Completely Failed in the Current Environment?

In conventional thinking, gold is the best safe haven for geopolitical risks—escalation of conflicts tends to push gold higher. But in this cycle, that logic has shown a rare failure.

The gold crash in June happened in an environment that was far from calm: the Middle East situation still saw ups and downs, U.S. inflation pressures had not eased, and market concerns about risk assets did not disappear. By common sense, gold should have had support. But capital prioritized the U.S. dollar.

First layer of failure: safe haven doesn’t mean “buy everything.” When risks become large enough and shocks severe enough, the most urgent action for financial institutions is to sell assets and increase cash (U.S. dollar) positions. Gold naturally ends up on the list of assets being sold. Investors sell gold alongside other holdings as a way to supplement liquidity, resulting in the abnormal pattern of gold falling in sync with U.S. equities.

Second layer of failure: the nature of the risk has changed. Middle East risks push up oil prices, oil prices push up inflation, and inflation forces the Federal Reserve to raise rates. Risk was supposed to support gold, yet it became a reason to suppress it. The more chaotic the geopolitical situation becomes, the less clear it is that gold will be stronger—if the chaos ultimately points to higher inflation and higher interest rates, gold is instead likely to get squeezed.

Third layer of failure: the opportunity-cost logic overrides the safe-haven logic. Gold’s most comfortable environment is one where risks rise and interest rates fall—capital wants safety, but doesn’t need to worry about the opportunity cost of holding gold. The market is trading a different script right now: risks are still there, and rates may be even higher. In such an environment, safe-haven capital prioritizes U.S. dollar assets that can both provide safety and generate returns, systematically weakening gold’s safe-haven function.

Does the Collective Downgrade of Target Prices by Institutions Mean the Trend Reversal Is Confirmed?

During this round of gold price decline, Wall Street investment banks shifted from consistent bullishness to collectively cutting their target prices—this is a signal worth close attention.

Goldman Sachs cut its gold target price for end-2026 sharply from $5,400 to $4,900. The firm had long been one of the steadiest and most outspoken bullish voices in the gold market, even recommending that investors “boldly buy gold” at the end of 2024. Goldman Sachs clearly listed two reasons for the downgrade: economists have pushed the Fed’s last two rate cuts to 2027, with no rate cuts expected during 2026; and since Warsh took office, it has signaled “hawkishness beyond expectations.”

Deutsche Bank cut its third-quarter target price to $4,300 and its fourth-quarter target to $4,800, with the maximum reduction reaching 22%. The bank warned that if the Federal Reserve implements 3 to 4 rate hikes, gold could fall to around $3,800. UBS cut its target price from $5,900 to $5,500. Bank of Montreal lowered its average gold price forecast for the second half of the year to $4,625.

The institutions’ collective shift has two implications: on the one hand, cutting target prices itself amplifies market pessimism, triggering continued ETF redemptions and systematic stop-loss selling for long positions in futures; on the other hand, it indicates that the market’s reassessment of gold’s medium- to long-term pricing logic has upgraded from a “short-term adjustment” to a “trend correction.”

However, it is worth noting that even after the downgrades, most institutions’ target prices remain above the current price. This suggests that institutions view the situation as a “mid-bull-market pause” rather than a “complete end to the bull market”—and that is precisely the core point of disagreement in the market right now.

Market Outlook After Gold Breaks Below $4,000

After the $4,000 level was lost, this price point has shifted from a psychological support level to a new resistance level.

In the short term, once key support is broken, it may trigger further selling—leveraged long liquidations, retail investors exiting with stop-losses, and gold prices may have room to probe further into the $3,800 to $3,900 range. Under Deutsche Bank’s extreme scenario, $3,800 has already been seen.

From a medium- to long-term perspective, the underlying structural support logic for gold has not completely unraveled. The Federal Reserve is currently maintaining high rates only to keep inflation suppressed, not launching a continuous, large-scale rate hike cycle. The global “de-dollarization” strategy by central banks is still ongoing. A World Gold Council survey shows that 84% of surveyed central banks expect gold’s share of total global reserves to increase moderately or significantly in five years.

But support logic is not the same as an upside logic. Until rate hike expectations are fully priced in and a turning point appears in the dollar’s strong cycle, the macro environment facing gold will likely remain tight. Whether and when gold can reclaim $4,000 will depend on how two key variables evolve: the final confirmation of the Federal Reserve’s interest-rate path, and the risk appetite shift of global safe-haven capital.

Summary

Spot gold broke below the $4,000 level, retracing about 30% from the historical high of around $5,600, marking the official end of the three-year bull market. The core driving force behind this selloff is that Federal Reserve policy expectations shifted from rate cuts to rate hikes, alongside the dollar index reaching a 13-month high and U.S. Treasury yields staying elevated—pushing up the opportunity cost of holding gold as a non-yielding asset. The synchronized plunge in gold and bitcoin signals the accelerating unwinding of the “dollar debasement trade,” with safe-haven capital prioritizing U.S. dollar assets that can both provide safety and generate returns. Global central bank gold buying offers long-term structural support, but in a macro environment dominated by rate hike expectations, physical buying is difficult to offset the concentrated withdrawal of financial capital. The $4,000 level has shifted from support to resistance; there is short-term risk of further downside, while the medium- to long-term trend depends on the Federal Reserve’s interest-rate path and the risk appetite shift of global safe-haven capital.

FAQ

Q: What does gold breaking below $4,000 mean?

$4,000 is an important psychological threshold for gold. Falling below this level means the market’s pricing logic for gold has undergone a fundamental change—from “inflation hedging” and the “dollar debasement trade” to a narrative of “rate hike expectations” and a “strong dollar.” From a technical analysis perspective, a retracement of over 20% from the historical high has confirmed a technical bear market.

Q: Why did gold fall together with bitcoin?

The synchronized decline in gold and bitcoin reflects the reversal of the same macro narrative—“the dollar debasement trade” is unraveling. The core logic of this trade was betting that fiscal profligacy and central bank tolerance for inflation would push up hard-asset prices. When the Federal Reserve issues hawkish signals and the market starts pricing in rate hikes, this logic is fundamentally shaken, and both asset classes experience valuation compression at the same time.

Q: Are global central banks still buying gold?

Yes. As of the end of March 2026, total global central bank gold reserves stood at 3.7 ten thousand tonnes. Nearly 90% of central banks expect to continue increasing gold reserves over the next 12 months. But some central banks have already started to reduce holdings—since the outbreak of the Iran War, Turkey has sold or lent 130 tonnes of gold. Central bank gold buying is a strategic allocation behavior with relatively low sensitivity to short-term price fluctuations.

Q: Has gold’s safe-haven property really failed?

No. It hasn’t failed—it has been replaced by a higher-priority safe-haven choice. When risks are severe enough, the most urgent action for financial institutions is to increase cash (U.S. dollar) positions. U.S. dollar assets can both provide a safe haven and generate returns; gold can provide a safe haven but has no interest. In an environment where rate hike expectations are heating up, capital prioritized the U.S. dollar.

Q: Will gold prices keep falling?

In the short term, after losing the $4,000 mark, further selling may be triggered, with a possible probe into the $3,800 to $3,900 range. Deutsche Bank’s extreme scenario has already seen $3,800. The medium-term trend depends on the final confirmation of the Federal Reserve’s interest-rate path and the risk appetite shift of global safe-haven capital.