Yesterday, gold broke through the psychological $4,000 level and continues to decline. Today, the metal is down another 0.5% to around $3,981 per ounce, following a nearly 3% plunge in the previous session. For the first time since November 2025, gold has fallen below the $4,000 mark. Silver has collapsed alongside gold, losing almost 7% on Wednesday and dropping below $60 for the first time since December. It appears that the multi-year rally in precious metals has come to an end.

The scale of the reversal is impressive. Over the past three years, gold posted double-digit annual gains and more than doubled in value, driven by purchases from central banks, asset managers, and retail investors. The metal peaked at around $5,600 per ounce in late January and has since fallen by more than 20% from its high. This threshold traditionally marks the beginning of a bear market. In other words, gold has technically shifted from a bullish trend to a bearish one—and that transition has unfolded before our eyes.

The reasons behind the reversal fit into a clear and familiar narrative. The primary trigger was the conflict between the United States and Iran, which drove up energy prices and fueled inflation. Elevated inflation forced the Federal Reserve to keep interest rates high, while the prospect of further rate hikes under the leadership of the new hawkish Federal Reserve Chair, Kevin Warsh, further undermined the appeal of a non-yielding asset such as gold.

Particular attention should be paid to what might be called the "currency debasement trade." This theme had long supported the bull market, as investors favored gold and Bitcoin over currencies viewed as vulnerable to fiscal problems. Now that trend is also losing momentum. Massive investment in artificial intelligence and the United States' relatively advantageous position in energy markets have strengthened the dollar against the currencies of energy-importing economies in Europe and Asia. All of this suggests that the narrative of America's cyclical exceptionalism has overtaken concerns about the dollar's long-term structural debasement. A strong dollar and persistent inflation are currently the two biggest headwinds for gold.

Notably, even the most committed gold bulls are beginning to retreat, as I have written previously. Goldman Sachs has cut its year-end forecast by $500 to $4,900 per ounce, while Deutsche Bank has lowered its fourth-quarter target by 17%. Formally, these projections still imply upside from current levels, but the fact that so many institutions are revising their forecasts downward signals a clear shift in sentiment.

If the reopening of the Strait of Hormuz quickly reduces inflation in the coming months, and the Fed pauses after one or two additional rate hikes, the fundamental case for another leg higher in gold could be restored. The long-term bullish argument—continued purchases by central banks around the world—has not disappeared. However, the market is currently driven by the logic of a strong dollar and high interest rates, and that logic is working against the metal.

From a technical perspective, buyers need to reclaim the nearest resistance level at $4,008. A successful move above that level would open the way toward $4,062, a level that may prove difficult to break. The next major upside target is $4,124.

If gold continues to fall, bears will attempt to take control of $3,954. Should that level give way, a breakout below the range would deal a serious blow to bullish positions and could push gold down to $3,906, with the potential for a further decline toward $3,849.