Bloomberg strategists have warned that the surge in gold prices is evolving from a store of value into speculative bets, with multiple technical indicators suggesting that this bull market may be nearing its end.
On March 17, Bloomberg commodity strategist Mike McGlone pointed out that as of the end of February, the premium of gold prices relative to the 60-month moving average has risen to the highest level since 1980, and the 180-day volatility has reached 2.4 times that of the S&amp;P 500 index, marking a 20-year high.
McGlone believes that this price level represents the &#34;best state achievable by a bull market,&#34; drawing parallels with the historic peaks in 1980 and 2011.
McGlone further emphasized that if gold prices cannot gain sustained support from the inflation environment of the 1970s or extreme geopolitical events, the risk of a pullback to $4,000 per ounce is increasing.
This week, the U.S. dollar index has fallen for two consecutive days, but spot gold prices have remained virtually unchanged, hovering around $5,000 per ounce.
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<h2>Overstretched Valuation, Comparing 1980 and 2011 Peaks</h2>
Mike McGlone compares the current situation to the gold surge from 2001 to 2011.
At that time, after gold prices peaked at $1,921 in 2011, that level was not surpassed until 2020. Currently, the speed of gold price increases has exceeded that previous surge, increasing the pressure for mean reversion.
It is noteworthy that the &#34;gold rush&#34; from 1979 to 1980 occurred against a backdrop of high inflation in the U.S. with CPI nearing 15%, while the current U.S. CPI is only 2.4%.
McGlone believes that such extreme increases in gold prices in a relatively mild inflation environment itself serves as evidence of overheating valuations.
The ratio of gold prices to the five-year moving average has risen to 1.6 times its historical high in 2026, with the only previous instance of reaching this level occurring during the peak price period from 1979 to 1980.
Additionally, the ratio of the S&amp;P 500 index to gold prices fell to 1.32 on March 13 and is trending towards 1. McGlone points out that the continued decline of this indicator suggests that gold's strength relative to stocks may have reached its limit.
More concerning is the rare divergence between gold's high volatility and the stock market's low volatility. Gold's 180-day volatility has reached 2.4 times that of the S&amp;P 500 index, a new high since 2006, while stock market volatility remains at extremely low levels.
McGlone believes that once stock market volatility rises and the upward momentum of gold prices recedes, the previous strength of gold may become a constraint, indicating that the rise in gold itself may signal greater pressure on all assets, especially the stock market.
<h2>Gold-Oil Ratio Reaches Historical Extremes, Mean Reversion Pressure Cannot Be Ignored</h2>
By the end of February, the price ratio of gold to WTI crude oil rose to 79, a level that has only been surpassed historically in the extreme situation of negative oil prices in April 2020.
As of March 13, this ratio remains as high as 51, while its 100-year historical average and mode are close to 20.
McGlone points out that the ratio between gold, this ancient store of value, and the most important industrial commodity is nearing a historical high, which may signal a peak in gold prices, and the next major trend in the commodity market could be a mean reversion in gold prices.
Regarding crude oil, McGlone believes that although the situation in Iran and related geopolitical shocks may temporarily drive oil prices up, such supply shocks are usually difficult to sustain, as high oil prices will encourage increased supply from the Western Hemisphere led by the United States.
If the situation eases, the support for crude oil will weaken, further increasing the pressure for gold prices to fall back to $4,000. McGlone's conclusion is that 2026 may see a multi-year peak for gold, similar to the historical highs of 1980 and 2011.

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Bloomberg strategist McGlone believes that by the end of February, the ratio of gold prices relative to the five-year average has risen to 1.6 times the historical high, the 180-day volatility has reached a 20-year high, and the gold-oil ratio has approached near historical extremes. These three indicators are simultaneously approaching the levels seen during the historical peaks in 1980 and 2011. In a mild environment with inflation at only 2.4%, this surge may have transformed from a store of value into pure speculation, with the risk of a pullback to $4,000 quietly accumulating

- Bloomberg strategist Mike McGlone warns that gold prices are shifting from a store of value to speculative bets, signaling a potential end to the current bull market.  
- As of February, gold's premium over the 60-month moving average reached its highest since 1980, while volatility is at a 20-year high, raising risks of a pullback to $4,000 per ounce without supportive inflation or geopolitical events.  
- The current valuation, compared to significant past peaks, alongside a high gold-to-oil ratio, suggests a possible price top and indicates that a mean reversion might be imminent in the commodity markets.

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Rare bearish gold report: $5,000 gold price is too high, comparable to the peaks of 1980 and 2011