Gold Bugs Bought the Dip, Options Traders Just Bought the Coffin 🪦

Options traders are positioning for a historic decline in gold, with one popular contract now wagering that the SPDR Gold Shares (GLD) ETF will fall roughly 40% by June 2028. The second-most active contract on Wednesday was the 240-strike put expiring that month, priced at $11.50, according to data from ThinkOrSwim and SpotGamma cited by CNBC. Of the $200 million in GLD options premium traded that day, $130 million was tied to puts, and eight of the ten most active contracts were puts, most of which were bought rather than sold.

The bearish positioning comes as gold has shed 26.5% since its January peak, erasing $9.75 trillion in market value. Silver has fared worse, dropping 47.69% and losing $3.2 trillion. Combined, gold and silver have lost $12.95 trillion in just 132 days, according to BullTheory, as the US-Iran war reshapes safe-haven flows. The GLD ETF itself has fallen 25% from its February intraday record, and on June 10 it traded below its 200-day moving average by the largest margin since 2022, per Barchart.

Major banks are growing cautious. Citigroup lowered its three-month gold target to $4,000 per ounce from $4,300, with analysts stating, "We see limited catalysts for a sustained move higher in the very near term." Nigam Arora, founder of the Arora Report, attributed the rout to official-sector selling, higher Indian import duties and stop-loss triggers at $4,400 or lower. "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.

Not all observers expect the decline to persist. Economist Peter Schiff argued that a prolonged conflict favors gold as it retests its March low, noting, "Gold is down over $100, trading below $4,150. It's retesting its March 23 low of $4,098. That bottom was established the first time Trump claimed the Iran war would soon end, sending gold back above $4,800. But a long, drawn-out war is far more bullish for gold than a quick end." For now, the surge in put activity combined with weakening bank price targets signals that options traders remain firmly positioned for further downside in precious metals.