The prospects of a ceasefire between the US and Iran remain uncertain, stirring global markets. Gold once fell below $4,400, entering a technical bear market.

Due to the contradictory signals released by U.S. President Trump regarding whether the U.S. and Iran can reach an agreement to end the nearly month-long war, global markets have become further turbulent, leading to a decline in gold prices. On Thursday, gold prices dropped as much as 3.4%, nearing a technical bear market—typically defined as a 20% drop from recent highs—but narrowed some of the losses after Trump indicated he would extend the pause on strikes against Iranian energy facilities. Trump stated on social media, “Negotiations are still ongoing,” adding, “Despite the so-called ‘fake news media’ and other misleading claims, the negotiations are progressing very smoothly.” As of the time of writing, spot gold was up 0.44%, close to $4,400 per ounce.

Since the war began nearly a month ago, gold has been under pressure.

Trump criticized the U.S. “fake news media” during a cabinet meeting on Thursday for reporting that he “eagerly hopes to end the war through diplomatic means,” insisting that “it is Iran that is begging to negotiate.” He stated, “(Iran) they are bad fighters, but they are great negotiators, and they are asking for a deal.” He later added, “I don’t know if we can do this. I don’t know if we want to do this.” He said whether to ceasefire depends on Iran, while U.S. military bombings would continue in the meantime. Meanwhile, he threatened to escalate military actions if negotiations fail. However, Trump later indicated that he would extend the deadline for avoiding attacks on Iranian energy facilities by 10 days, providing a brief respite for the global energy market.

Since the outbreak of the Middle East war nearly a month ago, gold prices have fallen over 15%, with its trend largely mirroring the stock market and inversely related to oil prices. Rising energy prices have heightened inflation risks and led investors to bet that major central banks will keep interest rates unchanged or raise them. This poses a disadvantage for non-yielding gold.

However, due to the potential for a prolonged war to pose downside risks for the U.S. economy, the outlook for Federal Reserve rate hikes may be somewhat limited. Wall Street is downgrading this year’s U.S. economic growth forecasts while raising projections for inflation and unemployment rates, and increasing the probability of an economic recession.

Furthermore, as hopes for a swift resolution to the conflict fade, oil prices rose on Thursday. Earlier, Iran confirmed that it is awaiting a response after rejecting the U.S. 15-point plan to end the war and presenting its own conditions.

According to calculations, approximately 85 tons of gold holdings in exchange-traded funds (ETFs) have been redeemed since the outbreak of the war. Standard Chartered analysts noted in a report that even at a price of $4,500 per ounce, 83 tons of holdings are in a loss position and may face further liquidation risk. Based on Wednesday’s closing gold price, this equates to about $12 billion. Analysts stated, “In the short term, overcrowded positions may still face vulnerabilities.”

It is worth mentioning that within two weeks of the outbreak of the Middle East war, the Central Bank of Turkey sold and exchanged about 60 tons of gold, valued at over $8 billion, which intensified downward pressure on gold prices.

Some investors are betting on a decline in gold prices through options, with one investor spending over $100 million earlier this week on put options for the largest gold-backed ETF. Put options give the buyer the right to sell at a predetermined price, which speculators use to bet on price declines, while miners use it to lock in high prices. This week, the cost of buying put options surged to a six-year high compared to the cost of buying equivalent call options.

Gold investors are betting on a decline in gold prices.