The gold market has received a new bearish signal. Demand for contracts that profit from further price declines has sharply increased in options on the SPDR Gold Shares fund. One of the most active scenarios suggests the metal could lose another 40% by June 2028.
The gold price fell below its 200-day moving average by the largest margin since 2022.
Sentiment changed quickly. After strong growth at the start of the year, gold turned downward, and related exchange-traded instruments fell with it. The GLD fund has already lost about 25% from its February intraday high, and the metal itself has dropped 26.5% from its January peak.
Options Show a Bet on Decline
On Wednesday, about $200 million in premiums passed through GLD options. Of this amount, about $130 million was in put options, that is, contracts that rise in value when the underlying asset falls.
According to CNBC, citing ThinkOrSwim and SpotGamma, eight of the ten most active contracts were puts. Moreover, most of them were being bought, not sold. This is an important detail: market participants are not just hedging, but actively betting on continued declines.
The second most active was a put with a strike of 240 and an expiration in June 2028. The contract cost $11.50 and starts to make a profit if GLD falls by about 40% from current levels. Such a horizon shows that some players are expecting not a short-term pullback, but a deeper reassessment of gold’s value.
Precious Metals Have Lost Trillions
The breakdown of the previous uptrend has affected not only gold. According to BullTheory, the combined losses of gold and silver over 132 days reached $12.95 trillion.
Silver fell even more sharply. The metal lost 47.69%, and its market value shrank by about $3.2 trillion. Silver usually moves more sharply than gold due to lower liquidity and greater connection to industrial demand, so its decline became an additional signal of weakness for the entire segment.
This is a painful reversal for the market. Not long ago, precious metals were seen as the main protection against inflation, debt, and geopolitics. Now investors see that even safe-haven assets can quickly lose support if capital flows and rate expectations change.
Banks Have Become More Cautious
Major banks are also lowering expectations. Citigroup cut its three-month gold forecast from $4,300 to $4,000 per ounce.
The bank’s analysts believe that in the near term, the metal has few obvious reasons for sustainable growth. In other words, the market does not see a strong event that could quickly return the price to its highs.
Such a revision is important for sentiment. When banks lower their targets and traders buy put options, the bearish scenario gains more weight. This does not guarantee a continued decline, but it shows that major players have become more cautious.
Central Bank Sales Increased Pressure
Arora Report founder Nigam Arora linked the sell-off to actions by the official sector. According to him, some central banks and governments may have sold gold to support their currencies or obtain dollar liquidity.
He specifically mentioned Turkey, which, in his view, is selling metal and buying dollars to support the lira. He also named Gulf countries among the sellers, including Qatar, the UAE, and Saudi Arabia, which may need funds amid military spending.
Additional factors included higher import duties in India and the triggering of stop orders at $4,400 and below. When the price passes such zones, automatic sales can accelerate the downward movement.
Geopolitics Does Not Give a Clear Signal
At first glance, a war between the US and Iran should support demand for safe-haven assets. But the current market reaction has been more complicated. Instead of steady growth, the metal continued to decline because investors began to reassess previous positions and take profits after a strong rally.
At the same time, not all analysts agree with the bearish assessment. Economist Peter Schiff believes that a prolonged conflict could be a more positive factor for gold than a quick end to the war.
According to him, the metal is again testing March lows. If the conflict turns out to be long, demand for safe-haven assets may return. This scenario leaves a chance for recovery, but for now the options market shows a different picture.
The Market Debates Gold’s Future
Right now, two logics are clashing in gold. The first points to continued declines: the price has already lost a quarter from its peak, banks are lowering forecasts, and options indicate demand for protection against declines.
The second logic relies on geopolitics. If the war drags on and investors again start seeking protection from risk, the metal could get support. Especially if dollar liquidity worsens or the market is again spooked by inflation.
But for now, the advantage remains with sellers. Activity in puts shows that a large part of the market is preparing for further declines. And not just in the coming weeks, but out to 2028.
What’s Next?
The coming months will show whether gold’s decline was a deep correction after overheated growth or the start of a longer downturn. For bulls, an important signal will be the return of demand for safe-haven assets and stabilization above the March lows.
For bears, the key argument is already there: options show strong interest in a scenario of further decline, and bank forecasts are becoming more cautious. If official sector sales continue, the pressure may persist.
The main takeaway is simple. Gold no longer looks like an unconditional winner amid geopolitics. The options market is already pricing in a scenario where the decline could continue by dozens of percent. But the fate of this scenario will depend on the war, the dollar, rates, and whether demand for safe-haven assets returns.
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