Gold on the brink of a historic reversal: is the 1980 scenario repeating itself?
Precious metals remain the only commodity sector that has not only shown confident growth but also managed to hold onto its gains. However, in my assessment, this very factor harbors the main threat. The market may be overheated, and we are on the verge of a significant correction.
The key signal is the formation of a so-called "red" annual candle. After gold updated its all-time high near the $5,500 per ounce mark in the first quarter, a pattern emerged on the chart that has invariably preceded long-term downtrends in the past. The last time such a premium of gold relative to the broad commodity index was observed was in 1980. That was followed by years of declining prices.
The inflationary backdrop changes the rules of the game
A critical difference between the current situation and 1980 is a fundamentally different inflationary landscape. While 45 years ago hyperinflation was the main driver of gold's rise, today, against the backdrop of price stabilization and monetary policy tightening, this factor is losing its power. This makes the current gap between gold and other commodities particularly vulnerable. The risk of normalization—that is, a return of prices to historical averages—is extremely high.
Commodities vs. Stocks: A no-win game
The dynamics of the BCOM commodity index relative to the stock market deserve special attention. The indicator is near historical lows compared to the S&P 500. This creates a "lose-lose" situation for commodities: either the stock market continues to rise, leaving commodities behind, or it begins to fall, dragging all risk assets down with it.
The only source of outperformance for commodities could be a collapse of the stock market itself—a scenario that can hardly be called positive for the economy as a whole.
My view: The current market configuration reminds me of the year 2000, but with one key difference—the dominant role of gold. The metal has become too detached from other commodities. The coming months will be a test of strength for this gap. I expect the second half of 2026 to mark the beginning of a reversal and a long-awaited correction.