Rare bearish gold report: $5,000 gold price is too high, comparable to the peaks in 1980 and 2011.

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Bloomberg strategists have issued a warning: the surge in gold prices is evolving from a store of value into speculative bets, with multiple technical indicators showing this bull market may be nearing its end.

On March 17, Bloomberg commodity strategist Mike McGlone pointed out, as of the end of February, the premium of gold prices over the 60-month moving average has risen to the highest level since 1980, and the 180-day volatility has reached 2.4 times that of the S&P 500 Index, a 20-year high.

McGlone believes that this price level is "the best state a bull market can reach" and compares it with the historic peaks of 1980 and 2011.

McGlone further emphasized that if gold prices do not receive sustained support from the inflation environment of the 1970s or extreme geopolitical events, the risk of falling back to $4,000 per ounce is rising.

This week, the US dollar index has fallen for two consecutive days, but spot gold prices have barely changed, staying near $5,000 per ounce.

Overstretched Valuations, Comparing Highs from 1980 and 2011

Mike McGlone compares the current situation to the gold surge from 2001 to 2011.

At that time, gold prices hit a high of $1,921 in 2011, a level not breached until 2020. The current rise in gold prices has surpassed that rally, making the pressure for mean reversion even greater.

It is noteworthy that the "gold rush" of 1979-1980 occurred amid a high inflation backdrop with US CPI close to 15%, whereas the current US CPI is only 2.4%.

McGlone believes that such an extreme surge in gold prices amid relatively mild inflation is itself evidence of overheated valuation.

The ratio of gold price to the five-year moving average hit a historical high of 1.6 times in 2026, with the only precedent for this level being the price peak period from 1979 to 1980.

Additionally, the ratio of the S&P 500 to gold price dropped to 1.32 on March 13 and is trending towards 1. McGlone points out that the continued decline of this indicator means gold's outperformance versus stocks may have reached its limit.

Even more concerning, the rare divergence between gold’s high volatility and the stock market’s low volatility has appeared. Gold's 180-day volatility is 2.4 times that of the S&P 500, the highest since 2006, while stock market volatility remains extremely low.

McGlone believes that once stock market volatility rises and gold’s rally fades, gold’s previous strength could become its own hindrance, meaning gold’s rise may foreshadow greater pressure on all assets, especially equities.

Gold/Oil Ratio Reaches Historic Extremes, Mean Reversion Pressure Cannot Be Ignored

At the end of February, the price ratio between gold and WTI crude rose to 79, a level only surpassed in April 2020 when crude oil prices turned negative.

As of March 13, the ratio remained as high as 51, while its 100-year historical mean and mode are both close to 20.

McGlone points out that the ratio between this age-old store of value and the most important industrial commodity approaching historic highs could mark a top for gold prices, and the next major commodity market move may be gold price mean reversion.

On the oil side, McGlone believes that although the Iran situation and related geopolitical shocks may trigger a temporary surge in oil prices, such supply shocks are usually hard to sustain, as high oil prices will prompt increased supply led by the United States and the Western Hemisphere.

If tensions ease, support for oil prices weakens further, heightening the pressure for gold prices to fall back to $4,000. McGlone concludes that 2026 may form a multi-year peak for gold, reminiscent of the historic highs in 1980 and 2011.

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