Why did gold drop below 4000 overnight? War ends + Fed turns hawkish, safe-haven assets are being repriced.

Let's start with the conclusion: Gold fell below $4,000 last night (intraday low around $3,964, the lowest since November 2025), silver plunged 7.4%, oil prices dropped 5%, and Bitcoin broke below $61,000. This isn't just about "the war is over, no need for safe-haven assets anymore," but rather a comprehensive repricing of non-yielding assets like gold and silver. Why does this concern you? If you hold gold, silver, or related ETFs (Exchange Traded Funds), this decline might not be over yet—tonight's data (US PCE inflation) will determine whether it's a pause or a bottom.
Why are they falling together? Three reasons occurred simultaneously.
First, the war tide receded. The US and Iran reached a ceasefire agreement, and the Strait of Hormuz (a vital global oil shipping route) reopened. The "war premium" in oil prices was squeezed out, with a single-day 5% drop bringing it back to pre-war levels.
Second, the US dollar strengthened. The new Fed Chair Warsh turned hawkish, hinting at possible further rate hikes this year (the market priced in a 76% probability of a September hike). The US Dollar Index rose to 101.56, its highest in 13 months. A stronger dollar makes non-yielding assets like gold less attractive—the "opportunity cost" of holding them increases.
Third, real interest rates (interest rates after inflation) rose, which is the most powerful force suppressing gold.
Why call it "repricing" and not "risk-off unwinding"? Look at silver—it fell 7.4%, more than double gold's 3% drop. Silver is both a safe-haven asset and an industrial metal, making it most sensitive and hardest hit during a systemic market repricing. If it were just "the war ended, no need for safe havens," gold and silver should have fallen in sync, not with a twofold difference.
What should you do (Observation → Understanding → Action):
· Observation: Gold, silver, crude oil, and Bitcoin falling together points to the same set of macro forces.
· Understanding: This is not a one-off negative event but a repricing driven by a changed interest rate environment; even Goldman Sachs and Deutsche Bank are lowering their gold price targets (Goldman Sachs $4,900, Deutsche Bank worst-case $3,800).
· Action (for reference only): Tonight's 20:30 US May PCE inflation is key. Strong data → stronger dollar, gold may fall further; weak data → short-term rebound for gold/silver, but the overall trend remains unchanged. Before chasing a long position in gold, be clear whether you're bottom-fishing or catching a falling knife. One long-term variable: The Chinese central bank has been buying gold for 19 consecutive months, potentially providing support at lower levels.

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