TradingKey - Gold prices ( XAUUSD) are fluctuating around $5,000 per ounce, as bearish voices begin to emerge in the market.
Bloomberg commodity strategist Mike McGlone recently released a rare bearish report, warning that current gold prices are in an overheated valuation state. Without the support of sustained high inflation or extreme geopolitical events, gold prices could repeat the historic peaking action of 1980 and 2011, and the risk of a retreat to $4,000 per ounce is accumulating.
McGlone's analysis shows that the gold market has already exhibited multiple topping signals. As of the end of February 2026, the premium of gold prices relative to their 60-month moving average rose to the highest level since 1980, indicating that gold prices have far exceeded their long-term fair valuation range.
Meanwhile, gold's 180-day volatility has reached 2.4 times that of the S&P 500, a new high since 2006, while stock market volatility remains at low levels. McGlone believes that once stock market volatility rises and the gold rally fades, gold's previous strength could instead become a headwind, as the rally in gold itself may signal that all assets, particularly equities, will face greater pressure.
On March 13, the ratio of the S&P 500 to gold prices fell to 1.32, showing a trend of approaching 1. The continued decline of this indicator suggests that gold's strength relative to stocks may have reached its limit, and mean reversion could follow.
Most alarming is the extreme deviation in the gold-to-oil ratio. At the end of February, the price ratio of gold to WTI crude oil rose to 79, an extreme situation seen only during the period of negative oil prices in April 2020. As of March 13, the ratio remains as high as 51, while its 100-year historical average is only 20, showing that gold is significantly overvalued relative to crude oil.
McGlone noted that the ratio between gold, this ancient store of value, and the most important industrial commodity is nearing a historical high, which could be a sign that gold prices are peaking. The next major move in the commodities market may be gold's reversion to the mean.
Comparing current market conditions with the major gold bull market of 2001-2011, it can be seen that the speed of the gold price increase in this round is significantly faster.
After gold prices hit a high of $1,921 in 2011, it took a full nine years to break out again. In contrast, this round took only six years for gold prices to rise from approximately $2,000 in 2020 to $5,000. This rapid ascent means the pressure for mean reversion is accumulating quickly.
Notably, the gold craze around 1980 occurred against a backdrop of extreme inflation with U.S. CPI as high as 15%, whereas the current U.S. CPI is only 2.4%. Such a sharp rise in gold prices in a relatively moderate inflation environment itself reflects excessive market optimism.
McGlone specifically emphasized that the ratio of gold prices relative to the five-year average reached 1.6 times in 2026. The only other time in history that the same level occurred was during the 1979-1980 gold price peak, a historical similarity that warrants high vigilance from investors.
Without the support of a high-inflation environment like that of the 1970s or persistent extreme geopolitical risks, 2026 could form a multi-year peak for gold, similar to the historical highs of 1980 and 2011.
For the crude oil market, McGlone pointed out that geopolitical shocks such as the situation in Iran could drive a temporary spike in oil prices, but such supply shocks are usually difficult to sustain. High oil prices will stimulate countries in the Western Hemisphere, such as the U.S., to increase supply. Once the situation eases and support for oil prices weakens, it will further increase the downward pressure on gold prices.
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