Gold’s steep decline has recently pushed the metal firmly into bear market territory due to rising Treasury yields and a strong U.S. dollar, as quoted on CNBC. Spot gold has now lost over 22% since hitting a high of $5,594.82 per ounce at the end of January, the CNBC article noted. SPDR Gold Trust GLD is off about 15% over the past month (read: Gold ETFs Log Worst Week in 15 Years Amid Iran War Jitters: Buy the Dip?).
Short-Term Pressures Drive the Decline
A stronger U.S. dollar — as evident from the 1.7% gain in Invesco DB US Dollar Index Bullish Fund UUP — has pressured bullion prices. Rising Treasury yields have also weighed on gold, as higher interest rates reduce the appeal of non-yielding assets like bullion.
Solid Buy-the-Dip Opportunity, Not a Trend Reversal
Despite the sharp pullback, many strategists view the decline as a buying opportunity.
Ed Yardeni, president of Yardeni Research, reiterated his bold long-term call of $10,000 gold by the end of the decade. While he trimmed his year-end forecast to $5,000 from $6,000, the revised target still implies notable upside from current levels, as quoted on CNBC.
Why Fundamentals for Gold Are Strong
The current selloff reflects short-term dynamics such as a sudden spike in inflationary fears, a strong dollar, liquidity needs, and portfolio rebalancing. However, the Iran war — which involves one of the most crucial energy-focused waterways, the Strait of Hormuz — is less likely to be prolonged.
Hence, sooner or later, the oil market will stabilize and so will global inflationary pressures. The moment inflation comes under control; the U.S. bond yields are likely to come down and favor non-yielding assets like gold.
Factors Playing Against Dollar Strength
The U.S. dollar may be gaining now, but the trend underneath is saying something else There is an emerging trend of de-dollarization, with BRICS economies taking important steps in that direction.
The greenback’s share in global reserves declined lately. The balance of greenbacks in international reserves declined to 56.3% between April and June 2025, per the International Monetary Fund, as mentioned on Bloomberg. That’s a decline of about 1.5 percentage points from the first quarter and the lowest level in three decades.
Invesco DB US Dollar Index Bullish Fund (UUP) has lost 3.5% over the past year (as of March 23, 2026), even after recent gains. Hence, once the Iran war crisis settles down, the greenback is less likely to stay strong, which will boost gold prices. Note that most commodities are priced in the greenback.
More Short-Term Pain but Long-Term Gain?
Central bank purchases — particularly from emerging markets – have been a key driver for the recent gold rally. The driver is now reversed. In a note on Friday, Bernard Dahdah, Precious Metals Analyst at Natixis, cautioned investors that gold prices could drop to $4,000 an ounce due to rising global economic uncertainty and inflation fears, as quoted on Kitco. Per Dahdah, some central banks are selling gold to protect their currency and/or to fund energy purchases.
“If the damage to energy infrastructure is limited and oil prices can quickly drop back to pre-war levels, then we could see central banks have a stronger appetite for gold purchases. This, in turn, could put gold back on its trajectory of enduring levels above $5,000/oz,” Dahdah noted, as quoted on Kitco.
How to Play the Trend?
First, investors should track the war closely. If you are worried about the ongoing Iran war or see further escalation, bet on inverse gold ETFs like ProShares UltraShort Gold GLL (up 35% over the past month) and MicroSectors Gold Miners -3X Inverse Leveraged ETNs GDXD (up 104% over the past month). These products are suitable for short-term trades.
However, if you have a strong risk appetite and believe structural drivers like currency war, occasional AI payoff worries, trade tensions and sustained central bank demand will remain in place, bet on gold ETFs like iShares Gold Trust IAU, SPDR Gold Minishares Trust of beneficial interest GLDM and abrdn Physical Gold Shares ETF SGOL with a long-term view.
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SPDR Gold Shares (GLD): ETF Research Reports
iShares Gold Trust (IAU): ETF Research Reports
abrdn Physical Gold Shares ETF (SGOL): ETF Research Reports
Invesco DB US Dollar Index Bullish ETF (UUP): ETF Research Reports
SPDR Gold MiniShares Trust (GLDM): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).