Three Forces Pushing Gold Down at Once — And Why the Long-Term Story Hasn't Changed

Gold has dropped more than 15% from near its all-time highs. Many analyses simplify this as "the Iran war caused it," but three completely different mechanisms are operating simultaneously. Understanding them separately is the only way to read where gold goes next.

TL;DR Oil shock selling, dollar peg defense selling, and war funding selling — three types of forced liquidation are pushing gold down at the same time. Add Russia's April gold export ban and China pausing purchases, and the picture gets worse short-term. But long-term structural factors (US debt, de-dollarization, inevitable rate cuts) remain unchanged.

Force One: Oil Shock Sellers

Countries that depend on energy imports are selling gold as surging oil prices create desperate dollar demand.

Turkey is the clearest example. Importing 90% of its oil and 98% of its gas, Turkey liquidated 58 tons in two weeks. India became a net seller for the first time in years starting January 2026. EU nations are rapidly depleting dollar reserves.

Selling from this group continues as long as oil stays elevated. The exit conditions are clear — oil prices drop, energy supply routes are restored, or a diplomatic resolution emerges.

Force Two: Dollar Peg Defenders

Gulf states are converting gold to dollars to maintain their currency pegs.

Saudi Arabia, UAE, Qatar, Bahrain, Oman — these countries face shrinking dollar inflows from oil exports while dollar demand rises from military spending and capital flight. London vault data shows 45 tons of net outflows this year with almost no official reporting.

The potential selling volume from this group is the largest. Combined official and unofficial gold holdings could run into hundreds of tons.

Force Three: War Funding Sellers

Countries at war or funding wars are monetizing gold to pay for military operations.

Russia sold $30 billion worth of gold last year, and the trend continues. Poland is discussing monetizing roughly 550 tons ($13 billion) of gold for defense spending. Gulf nations could be added to this category as well.

Russia's Gold Export Ban — April Is the Inflection Point

Russia adds another variable. As one of the world's largest gold producers, Russia is effectively banning exports of gold above 100 grams starting April 2026. That is roughly $15,000 worth — personal scale, not institutional.

The context is Russia's 2022 ejection from the LBMA and the G7 ban on Russian gold imports. Russia is building a parallel payment system and a parallel gold market.

Before the April deadline, Russian gold holders will try to move metal out of the country. Nobody wants their assets legally locked inside Russia. This means additional selling pressure hitting markets in the short term.

After April, however, Russian gold disappears from the international market. Think about what happened to silver prices when China restricted exports. The long-term effect of supply contraction is price appreciation.

The Biggest Buyer Has Stepped Away

What makes the situation worse is the absence of the largest buyer.

China purchased 27 tons in 2025 (the real number is likely much higher), but paused gold purchases in Q4 2025. The world's largest state buyer hit pause. The dynamic where central banks were absorbing 1,000+ tons annually and supporting gold prices is weakening.

Selling pressure coming from three directions while the buy side has lost its biggest player. That is a challenging combination for gold in the short term.

Why the Long-Term Story Has Not Changed

It helps to step back here.

Are US government rate cuts ultimately inevitable? Looking at $38 trillion in debt and over $1 trillion in annual interest payments, I believe so. Will the US government print more money? Given the deficit trajectory, it has to. Will they artificially suppress rates? When interest payments exceed the defense budget, there are few alternatives.

All of this points to dollar depreciation. Russia restricting gold exports and building its own financial system also reduces long-term dollar demand. The de-dollarization trend was temporarily interrupted by the war, but the structural direction has not changed.

What is happening now is a forced-selling episode within a long-term bull market. If you are an investor who only buys when prices are rising, this is an uncomfortable period. But for investors who understand the structure, the same period can look entirely different.