The precious metals market remained in recovery mode on Wednesday morning, with prices rising against the backdrop of historic declines. By 3:45 a.m. ET, spot gold inched toward a 3% gain, settling around $5,079.4 an ounce. New York gold futures rose 3.3% to $5,093.80. XAU= 1Y Line Gold Price Generally considered a safe-haven asset, gold has had a very strong 12-month period, rising 66% during 2025 and extending that rally into early 2026. Geopolitical tensions, unpredictable trade policy, and concerns about the independence of the Federal Reserve all supported prices. But the bull market was derailed when gold prices fell nearly 10% on Friday, sending downward pressure across the broader precious metals market, with silver, palladium and platinum falling sharply. The sell-off triggered by the nomination of Kevin Warsh as the next Federal Reserve Chairman continued into Monday trading, but by Tuesday spot gold was showing signs of recovery, rising more than 6% to settle at about $4,946.81 an ounce. Read more Gold and silver rally, leading to gains in global mining stocks and precious metals ETFs Silver plunges 30% in worst day since 1980, gold falls as Warsh allays Fed independence concerns Ray Dalio warns world is ‘on the brink’ of capital war However, many market watchers say gold still has upside potential given the volatility and view last week’s decline as a temporary pullback rather than the end of the bull market. market. Russ Mold, investment director at AJ Bell, said in a note on Monday that gold is currently in the midst of its third major bull market since 1971, noting that each previous bull market has “experienced several major pullbacks.” Mold said the bull market from 1971 to 1980, which began when President Richard Nixon took the U.S. dollar off the gold standard and was followed by rising U.S. deficits, oil shocks and soaring inflation, saw the price of gold “rise” from $35 an ounce to a peak of $835 an ounce in 1980. During this period, gold prices also declined multiple times, with the longest “correction” lasting 105 days and the steepest price decline of 19.4%, according to AJ Bell and LSEG data. After a period of “hibernation,” gold began another bull market in 2001, attracting “a new generation of investors seeking to escape the ultra-loose monetary policies that followed the bursting of the telecom bubble and the subsequent Great Financial Crisis of 2007-2009,” Mold said. According to AJ Bell data, there were five price corrections during the 2001-2011 bull market, each leading to price declines of up to 16%. The current bull market, which Mold notes started in 2015, had experienced five corrections before Friday’s pullback. “The 20%+ rally in 2022 caught some bulls off guard as the world recovered from lockdown and corrections of 10% or more in 2016, 2018, 2020, 2021 and 2023 each warned that volatility was never far away,” Mold said. “Precious metal bulls may therefore be tempted to argue that this sell-off is an opportunity to buy more, as geopolitical uncertainty, persistent inflation, and soaring government debt form the basis of the investment case for gold in particular, and these issues will eventually be resolved. George Cheverley, a portfolio manager in the natural resources team at global investment management firm Ninety One, told CNBC on Tuesday that the factors that have historically supported gold prices remain in place. “From a historical perspective, gold’s current strength appears to be more consistent with a late-cycle environment than with the early stages of a speculative rally,” he said. However, Cheverley added that there is one additional important factor in the current cycle. “The notable difference this cycle is the scale and persistence of central bank demand, which has been a more important driver of the market than last time,” he said in an email. “This provides a degree of structural support that has historically not existed at comparable points in the cycle.” Net purchases of gold by central banks in 2025 fell to 328 tonnes from 345 tonnes the previous year, according to research by the World Gold Council. But Cheverley said the broader context would continue to fuel the yellow metal’s momentum. “Looking to the future, history suggests that gold can remain resilient even during periods of volatility, especially if real yields continue to be compressed and uncertainties around growth, debt and geopolitics persist,” he told CNBC. Investment bank strategists also said Tuesday that gold, generally considered a safe investment, remains supported by broader macroeconomic and geopolitical uncertainties. “Despite ‘overvalued’ flashing on the screen, the constant premium to gold’s fair value (around $4,000 in our model) appears durable, suggesting gold is not in a bubble,” Barclays strategists said in a note. Past cycles have shown that “mismatches with fair value can persist for years,” he said, noting that inflation, questions about U.S. policy and a weakening dollar supported price increases. Friday’s plunge was gold’s steepest one-day loss in 13 years, UBS’s chief investment office said in a note titled “It’s Not Over” on Monday. “Investors are considering whether this event signals the end of the gold bull market or a move into a more unpredictable period.” “Gold bull markets typically end not just because fears subside or the price gets too high, but when central banks establish credibility and pivot to a new monetary policy regime. Mr. Warsh has not proven as much credibility as[former Chairman Paul]Volcker, so we don’t think this is the end of the gold bull market.” According to UBS analysis, Paul Volker’s introduction of stricter monetary policy in 1980 “effectively restored confidence in the Fed,” leading to a significant rise in real interest rates and a prolonged period of strong dollar strength. “Through past price cycles, in the 1970s, 2000s, and since 2020, gold prices have tended to rise whenever investors question the ability of Fed policymakers to maintain the real value of the dollar,” the financial institution strategists said. “The dollar index has fallen by more than 10% over the past year amid concerns about central bank independence and an unpredictable policy mix from the White House,” he said.“Our analysis shows that gold is now in the mid-to-late stages of a consistent bull run.” “We are on track to reach new highs, but with intermittent drawdowns of 5-8%,” the UBS team said in a note. “Importantly, the typical factors historically associated with the end of a gold bull market – sustained real interest rate increases, a structurally strong US dollar, improving geopolitical conditions, and a full re-establishment of central bank credibility – have not yet materialized in our view.” By the end of the year, it will fall to $5,900.
