Gold hasn't lost its way - it's proved its worth

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The price of gold has come down a long way from its high at the beginning of the year, and most people are saying it's lost its way — that it hasn't been a very good asset. I'd argue the opposite: once the price action of the first half of 2026 is explained, it's clear gold has not lost its way. Instead, it has proved itself to be an important asset to have for portfolio diversification. Support levels in gold were challenged in June 2026, but there is logic to this pullback. Here are the stages since we peaked at the beginning of the year.

Stage one: speculative length grew too large

Initially, the speculative length in gold had grown too large as the prospect of a war in the Middle East became inevitable. As always happens, when everyone is long and there is no one left to buy, the market can only go one way.

Stage two: a strong dollar and the crude oil correlation

The next part of the sell-off can be attributed, in part, to a strong dollar, but also to algorithmic traders latching on to the incredible negative correlation gold was having with crude oil. When you find a correlation that works, as a speculative trader, you have to run with it.

Putting the retracement in context

The resulting sell-off amounted to a gigantic $1,500-per-ounce retracement from the highs. But we have to remember that two years ago, prices were trending in a $2,200–$2,400 range — so a 50% pullback from the highs isn't necessarily a catastrophe, technically speaking.

Where we go from here

We're now back in more normal territory, though the strong USD will continue to provide headwinds. Still, many long-term investors will see prices around $4,000 as a good entry point to start accumulating gold positions, in the expectation that de-dollarisation will continue to be a theme going forward.