Gold breaks a new low for 2026 – Why buying now may be your best move – Fat Tail Daily

Gold enthusiasts haven’t had a good time in the past month. And it doesn’t seem like it’s getting better this week either:

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As you can see in the figure above, gold looks like it’s setting up a bearish trend. Many who felt euphoria at the start of this year are now wondering whether this is the end of the gold bull market. We’ve seen several failed breakouts, followed by selling waves. Unless you’re a dyed-in-the-wool precious metals loyalist, you’re likely thinking that it’s time to pack up and find another commodity to pursue.

Say, isn’t copper setting a new record high? And what about lithium and nickel?

I’m not disputing that these metals make great alternatives. But I wouldn’t call it a day for gold and silver. In fact, I’ll go so far as to say that we might not be too far away from a bottom for precious metals.

Intrigued? Let me explore this today…

Who is eating gold’s lunch?
Not the US dollar

Gold and the US dollar are the two safe haven assets in the current financial system. They usually move in opposite directions under normal conditions, and rise together when the global economy is in distress.

We saw how gold gained at the expense of the US dollar in the past four years. However, as gold lost ground, the US dollar has unexpectedly stayed at similar levels.

We can look at the figure below showing the relationship between gold and the US Dollar Index [DXY] over the last four years: .

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Gold’s retreat in 2022 began shortly after the US Federal Reserve and central banks worldwide raised interest rates at a record pace to fight inflation. After inflation peaked in June 2022, it began to slow rapidly, raising concerns that central banks may have overdone their monetary policy.

As central banks shifted from hawkish to dovish in 2023-24, gold gained the upper hand. It took off from March 2024 onwards as the Federal Reserve confirmed that it would cut interest rates. This accelerated further in 2025 after the Trump administration imposed tariffs against other countries and the Federal Reserve continued to reduce the interest rate to stimulate economic activity. These actions contributed to the US Dollar Index falling below 100.

Over the past year, news of escalating conflicts sent capital to seek safety, though gold tended to rise faster than the US dollar. Even as the Iranian conflict broke out, gold initially rallied while the US Dollar Index managed only a small bounce. It temporarily moved above 100 but failed to hold that level. Only when oil soared above US$100 a barrel and ignited fears of prolonged inflation did gold pull back.

Yet, that didn’t help the dollar to gain ground at gold’s expense.

So where did the capital go instead?

Crazy market valuations exceed
fears of a market crash

While the Iranian conflict created uncertainty and fears of an inevitable market collapse, investors have largely shaken those concerns off, buying the major market indices and pushing them higher.

You can see it in our ASX 200 Index [ASX:XJO] and the S&P 500 Index [SPX]:

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Many rational investors find this to be unbelievable. How can investors believe an impending market crash caused by a spike in oil, while the stock markets are making new highs?

A more sensible response would be to take refuge in safe assets, such as bonds and gold. That’s not playing out right now, which may provide an opportunity for people to get in early.

Bond yields have increased since the conflict broke out. This means investors are selling bonds. Below is a figure showing the US 10-year Treasury Bond yield in the last three months:

Source: MarketWatch

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But nothing compares to the relentless rise of tech stocks, as you can see with the NASDAQ Index [COMP]:

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Tech stocks have run up on the momentum of AI stocks. Moreover, excitement over the IPO of Elon Musk’s SpaceX is fuelling the buying wave. The company is set to debut tomorrow night on the US market with analysts estimating the company’s value at around US$1.75 trillion. This will be the largest IPO to date.

The market’s response seems to be unequivocal. Investors are opting to chase returns rather than seek safety. This contradicts the prevailing narrative that the Iranian conflict will boomerang on the global markets.

So which side should you take? The economy will hold up or is a crash around the corner?

More importantly, why is buying gold a great move now?

Why gold and precious metals
are your obvious choice

You may have seen the figures above that the market indices have all turned down recently. It’s evident with the S&P 500 and NASDAQ.

Perhaps the market is setting up for a crash, waiting for SpaceX to debut and mark the top. After the euphoria gives way to rationality, the smart money sells, triggering a selloff that could spread.

Alternatively, this might just be a sign that capital has drained to tech stock valuation, which will convert into physical value as these companies build data centres and other infrastructure. That could flow into other industries and move capital from Wall Street into Main Street in a healthy manner.

Either outcomes are possible.

But there’s no need to pick a side.

Gold and precious metals assets are positioned well regardless of the outcome.

If the first scenario happens, then gold and precious metals assets might follow other assets into a crash. Given they’ve sold off significantly in the recent past, they’re more likely to recover. Gold will be one of the first to do that at the sign of central banks rapidly cutting rates to salvage the system.

If the second scenario happens, then gold and precious metals assets will likely recover slower at first. What matters is the outcome in Iran and how the US Federal Reserve will respond. Once the economy smooths out the impact caused by the disruption of the Iranian conflict, it’s likely that rate hikes will be off the table. This opens the gates for gold and precious metals to rally.

Currently, market valuations are excessive across many industries worldwide. Gold and precious metals assets have sold to more reasonable levels compared to earlier this year.

Having invested across three gold price cycles with my own family wealth, I have identified such buying opportunities that allowed me to outperform the benchmark indices over the last ten years. Right now, the setup for precious metals assets is a contrarian investor’s delight. Market sentiment has done a 180-degree turn from earlier this year. An astute investor like you should get in now and pick up undervalued assets in this space.

Why not get started on building your precious metals portfolio now? Please click here to learn more about my guide that covers the history of the monetary system, the risk-return profile of precious metals assets, how to value and select gold stocks, and my personal experience and lessons.

While others are queuing up in a crowded market, make your move now into gold, silver and gold stocks. Who knows, the coming months might see a return of news headlines showing people queuing up to buy gold and silver!