Gold in Bear Market — ETFs Down Over 20%, Fed's Moves Key
By John Nada·Jun 20, 2026·4 min read
Gold tumbles into a bear market, dragging ETFs down over 20%. The Fed's rate decisions and geopolitical shifts could shape recovery paths.
Gold has stumbled into a bear market, sending shockwaves through the ETFs that track it. On June 16, SPDR Gold Shares, the largest gold-backed ETF, fell 22% from its 52-week high, according to Yahoo Finance. These figures underscore a broader downturn for bullion, which has traditionally been a safe haven for investors seeking stability in turbulent times.
The decline in gold prices has been mirrored across various platforms and indices, with the VanEck Gold Miners ETF experiencing a significant drop of 25% from its previous highs. This is indicative of the volatility inherent in mining stocks, which often exaggerate the movements of gold prices. Historically, these stocks have a tendency to swing further in both directions compared to the physical commodity itself, indicating the potential for both higher gains and steeper losses.
The Federal Reserve's recent decision to maintain interest rates has compounded difficulties for gold. Since gold generates no income through dividends or interest, higher Treasury yields make it less attractive compared to low-risk government debt. This dynamic creates a challenging environment for gold as an investment vehicle, particularly when interest rates are poised to rise. However, the Fed's hint at a potential rate hike later this year leaves room for change, which could affect gold's attractiveness.
Yet there's more at play than just Fed policy. Lower oil prices, tied to geopolitical developments such as the easing conflict in Iran, are reducing operational costs for energy-intensive sectors like mining. This trend benefits the VanEck ETF, which includes many diesel-dependent miners. Lower fuel costs can improve profit margins for these companies, potentially offsetting some of the losses caused by declining gold prices.
Larger gold miners have also demonstrated their resilience by achieving revenue growth and expanding margins in 2025. These companies have managed to post gains in revenue and return on equity (ROE), showcasing their ability to endure challenging market conditions. This resilience offers some hope for a rebound if conditions stabilize, particularly for investors eyeing opportunities within the VanEck Gold Miners ETF.
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The $25.9 billion VanEck Gold Miners ETF may appeal to investors who are willing to withstand some volatility. With its current earnings discount compared to the broader market, this ETF could be an attractive option for those looking to invest in gold mining stocks at a lower cost. However, potential investors must be prepared for the inherent risks associated with the gold mining sector, which can be subject to sudden and dramatic fluctuations.
The relationship between gold prices and interest rates is well-established. When interest rates rise, the opportunity cost of holding non-yielding assets like gold increases, making them less appealing to investors. As a result, any future decisions by the Federal Reserve concerning rate hikes will be closely watched by market participants. A decrease in interest rates could potentially lead to a resurgence in gold prices, providing a boost to ETFs like the SPDR Gold Shares and VanEck Gold Miners ETF.
While the current market environment is challenging for gold, it is important to consider the historical context. Gold has frequently been perceived as a safe haven during times of economic uncertainty. Its value often increases when other asset classes, such as equities, experience volatility. This historical precedent suggests that gold could once again become a favored investment if market conditions shift.
The geopolitical landscape also plays a crucial role in shaping gold's market dynamics. Developments in regions such as Iran can have a profound impact on global oil prices, which in turn affect the cost structures of mining operations. As tensions ease and oil prices stabilize, gold mining companies may find themselves in a more favorable position to capitalize on any recovery in gold prices.
Investors must also consider the broader economic indicators that could influence gold's trajectory. Inflation rates, currency fluctuations, and global economic growth all have the potential to impact gold prices and the performance of associated ETFs. Keeping a close eye on these factors will be essential for those looking to navigate the complexities of the gold market.