Gold on the verge of repeating the 1980 scenario: analyst warns of reversal risk
Precious metals remain the only commodity sector that has not only grown but also held onto its gains. However, in my assessment, this growth may prove excessive. There is a high probability that gold formed a sustainable peak in 2026 and risks reversing downward as early as the second half of the year.
The essence of the current situation in commodity markets fits into a single chart: precious metals are the only segment that moved upward and stayed there. I would call the other commodity sectors "duds" — they either did not grow or have already returned to levels seen in previous years.
Why gold risks reversing
Gold acts as the "beta" to metals — the leading commodity sector. This is precisely why its dynamics largely determine the entire market, and after record growth, I see elevated risks of a pullback. The chart clearly shows how gold formed a large "red" annual candle after reaching a peak near $5,500 per ounce in the first quarter. Such a candle is a classic signal of a downward reversal following a strong rally.
I find the comparison with the past particularly telling. The last time gold reached such a premium relative to the broad commodity index was in 1980, which was followed by a prolonged and deep decline. The key difference from that period is inflation. Current macroeconomic conditions differ from 1980, which only increases the risk of gold prices normalizing relative to other commodities.
What awaits commodities in the showdown with the stock market
Separately, it is worth noting the connection between commodities and the stock market. The surge of the BCOM commodity index to a new high in the first half of the year may prove short-lived. The BCOM index is holding near a new low relative to the total return of the S&P 500 index. From this, I conclude that commodities essentially have only one key driver for outperformance — a decline in the stock market itself.
I characterize this configuration as a "lose-lose" situation for the commodity market. Either the equity sector continues to grow, and commodities lag behind, or it falls, dragging risk assets down with it. The difference from the previous period of commodity underperformance relative to equities in 2000, I see precisely in the superior dynamics of gold. Currently, the precious metal has diverged significantly from other commodities, and the coming months will be a test of the sustainability of this gap.
My expert opinion: The 1980 scenario is not just a historical analogy but a real risk for gold holders. If inflationary pressure continues to ease and the stock market holds up, the correction in gold could be deep and prolonged. Investors should reassess their positions and be prepared for volatility in the second half of the year.