Is the gold bull market still alive? Analyst: The previous two bull markets experienced multiple major pullbacks; declines are good opportunities to increase positions.
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Despite last week's historic plunge, market observers believe that the bull market in gold is far from over. Analysts generally think that the recent volatility is more like a temporary pullback within a longer-term upward trend, rather than a structural reversal. Historical data shows that these kinds of corrections are often opportunities to re-enter the market.
The precious metals market has seen intense turbulence recently. After soaring 66% throughout 2025 and continuing into early 2026, gold prices plunged sharply last Friday, falling nearly 10% in a single day and dragging down silver, palladium, and platinum. The trigger for this sell-off was the nomination of Warsh as the next Federal Reserve chairman, which markets interpreted as easing previous concerns over Fed independence. This was also gold's most severe single-day drop in 13 years.
However, the market quickly moved into recovery mode. As investors reassessed the situation, spot gold rebounded more than 6% on Tuesday, closing near $4,946.81 per ounce. The rebound continued into Wednesday's early session. As of 3:45 a.m. EST, spot gold rose about 3% to $5,079.4, and New York gold futures jumped 3.3% to $5,093.80.
Institutional strategists point out that despite flashing "overvalued" signals on the screen, the geopolitical tensions, trade policy uncertainties, and debt worries supporting gold prices have not dissipated. Multiple investment banks' analyses show the current decline has not undermined the long-term investment logic and may instead be a buying opportunity amid this historic bull market.
History Repeats: Corrections Are Normal in Bull Markets
AJ Bell’s investment director Russ Mould noted in a Monday report that gold is currently in its third major bull market since 1971, and the previous two bull runs both saw several major corrections.
Mould analyzed that the 1971-1980 bull market began when President Nixon severed the dollar's link to gold, followed by a surge in the US deficit, oil shocks, and skyrocketing inflation, pushing gold from $35 per ounce to a 1980 peak of $835. According to AJ Bell and LSEG data, gold prices saw several drops during this period, with the longest "adjustment period" lasting 105 days and the steepest decline reaching 19.4%.
Similarly, in the 2001-2011 bull market, the data recorded five price corrections, each with declines up to 16%. Mould believes the current bull run began in 2015 and had already experienced five corrections before last Friday's pullback, including a more than 20% decline in 2022. He emphasized that geopolitical uncertainty, persistent inflation, and surging government debt are the foundation of gold investment, "and since these issues have not changed compared to last week, this sudden drop may be a buying opportunity."
Central Bank Demand and Valuation Premium
George Cheveley, portfolio manager of the global investment management company Ninety One's natural resources team, told CNBC that from a historical perspective, gold’s current strength is more consistent with the late stage of a cycle, rather than the early stage of a speculative rally. But he pointed out that this cycle has a key differentiating factor: the scale and persistence of central bank demand.
Cheveley wrote in an email that central bank demand has become a more important market driver than before, providing structural support that was absent in similar historical periods. Although World Gold Council data shows that in 2025 net gold purchases by central banks decreased from 345 tons in the previous year to 328 tons, Cheveley believes that as long as real yields stay low and uncertainty about growth, debt, and geopolitics persists, gold will remain resilient.
Barclays strategists also noted in a Tuesday report that although their model shows gold is "overvalued" compared to its fair value of around $4,000, this premium seems persistent rather than a sign of a bubble. They point out that historical cycles indicate the mismatch between price and fair value can last for years, and inflation, US policy issues, and the long-term devaluation trend of the dollar all support high gold prices.
The Fed's Credibility Is Not the Only End Signal
UBS's Chief Investment Office noted in a Monday report entitled "Not the Endgame" that gold bull markets usually do not end simply because fear recedes or prices become too high; only when central banks restore credibility and shift to new monetary policy mechanisms does the bull market end.
UBS analyzed that in 1980, Paul Volcker's tough monetary policy effectively restored the Fed’s credibility, leading to a sharp rise in real interest rates and long-term dollar appreciation, thus ending that gold bull market. However, UBS strategists say that since Kevin Warsh has yet to show Volcker-level credibility, the current selloff does not mark the end of this bull run. Over the past year, the dollar index has dropped by more than 10%, reflecting market concerns over central bank independence and the White House’s policy mix.
UBS's team believes that gold is currently in the middle to late stage of this bull run, shifting from a steady upward trajectory to a phase of new highs with intermittent pullbacks of 5-8%. The report emphasizes that the typical factors ending gold bull markets—persistently high real rates, structurally strong dollar, geopolitical improvement, and fully restored central bank credibility—are all currently absent. UBS forecasts gold will reach $6,200 next month, then pull back to $5,900 by year-end.
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