Gold’s sharp retreat from record highs may have further to fall, according to a growing number of traders who are increasingly wagering that the precious metal could remain under pressure through 2028.
The stunning reversal of gold from record highs is accelerating, and options traders are increasingly wagering that the selloff may continue for years rather than months. The SPDR Gold Shares ETF, known by its ticker GLD, has now fallen 25% from its intraday peak reached in February, erasing a significant portion of the precious metal’s historic rally.
While gold has long been viewed as a safe-haven asset during periods of economic uncertainty, recent trading activity suggests investors are growing more pessimistic about its near-term prospects.
According to CNBC, options traders piled into bearish positions on Wednesday as gold prices suffered another sharp decline. Despite the ETF falling roughly 3% during the session, investors continued purchasing downside protection, signaling expectations for further losses ahead.
Data from ThinkOrSwim and SpotGamma cited by CNBC showed that of approximately $200 million in options premium traded on GLD on Wednesday, about $130 million was tied to put options, contracts that increase in value when prices decline. Eight of the 10 most actively traded options contracts were puts, and more than half of the put-option premium was purchased aggressively at the asking price or higher, indicating strong demand from bearish traders.
One trade in particular caught the market’s attention. The second-most active put contract in GLD was a June 2028 option with a strike price of $240. At roughly $11.50 per contract, the position represents a highly pessimistic wager that gold could decline another 40% over the next two years.
The options activity comes as several market forces have combined to pressure gold prices. Nigam Arora, founder of the Arora Report, told CNBC that central bank activity, geopolitical developments, and technical trading patterns are all contributing to the metal’s weakness.”Turkey’s central bank is selling gold and buying dollars trying to support the lira, and the Gulf nations, Qatar, UAE, Saudi Arabia, they need the money for the war so they’ve been selling gold, too,” Arora said.
He also pointed to weakening demand from one of the world’s largest gold-consuming nations.”At the same time, India’s raised duties on gold, and anyone who’s just watching charts, they had stops under $4,400 and had to start selling when it broke that level,” Arora added.
The technical breakdown below key support levels appears to have triggered additional selling from momentum traders and algorithmic funds. Such investors often use predetermined stop-loss orders that automatically liquidate positions when prices fall below certain thresholds, potentially accelerating market declines.
Yet not every corner of the precious-metals market is flashing warning signs. Gold mining stocks, which often move alongside bullion prices, are showing a notably different pattern in the options market.
The VanEck Gold Miners ETF, known as GDX, saw call options outpace puts by more than two-to-one on Wednesday, according to CNBC. Traders also purchased roughly three times as many calls as puts, suggesting some investors believe mining companies could outperform even if gold prices remain under pressure.
The largest trade in GDX involved a trader selling 2,000 at-the-money puts and calls expiring in December 2028, creating what is known as a short straddle position worth nearly $8 million. The trade would profit if the ETF remains within a broad range between approximately $35 and $115 by expiration.
Arora argued that mining companies may offer a more attractive opportunity than physical gold at current levels.”Gold miners never rose to the level they should have when gold was above $5,000,” he told CNBC. “If you want to be in precious metals, GDX is a better value because if their average cost is around $1,500, their profits are significant.”
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