While geopolitical uncertainty often supports gold prices, Citi analysts argue that the current setup creates a unique risk-reward scenario for investors.

“The near-term risk skew therefore looks negative, and dip buying here makes sense only with a strong view of no re-escalation,” analysts noted, as quoted by CNBC. “Longer term, we maintain a bullish gold view, but we believe it is extremely high-risk in the near-term for anyone without very wide stops and longer-term investment horizons.”

Why Gold Could Come Under Pressure

Gold has traditionally served as a hedge against uncertainty, inflation, and financial instability. During periods of market stress, investors often flock to the metal as a store of value.

However, after a powerful run higher, some analysts believe much of the geopolitical risk premium is already reflected in gold prices. 

In addition, expectations surrounding interest rates remain a key variable. If inflation remains stubborn and the Federal Reserve delays additional rate cuts, higher-for-longer interest rates could pressure non-yielding assets like gold.

Investing in mining stocks such as Newmont Gold (NYSE: NEM) or Rio Tinto (NYSE: RIO) has been a popular way to take advantage of the catch-up trade in physical gold, without the custodial concerns. However, if you’re concerned about volatility, you can invest in inverse gold ETFs, or ETFs that do well when the price of gold sinks. That includes: 

• Direxion Daily Gold Miners Index Bear 2x Shares ETF (NYSEARCA: DUST): With an expense ratio of 0.93%, the Direxion Daily Gold Miners Index Bear 2x Shares ETF returns 200% of the inverse of the performance of the NYSE ARCA Gold Miners Index. 

• Direxion Daily Junior Gold Miners Index Bear 2x Shares ETF (NYSEARCA: JDST): With an expense ratio of 0.89%, the Direxion Daily Junior Gold Miners Index Bear 2x Shares ETF returns 200% of the inverse of the performance of the MVIS Global Junior Gold Miners Index. 

• ProShares UltraShort Gold ETF (NYSEARCA: GLL): With an expense ratio of 0.95%, the ETF seeks to return 200% of the inverse of the performance of the Bloomberg Gold Subindex. It has also been in a solid downtrend because of gold’s solid uptrend. 

Long-Term Bull Case Remains Intact

At the same time, there are reasons to be bullish on gold.

For example, JPMorgan says gold prices could test $6,300 in 2026, thanks to an increase in central bank buying. Goldman Sachs is also bullish on gold with a year-end forecast of $5,400 per troy ounce “after increasing its estimates for central bank demand and predicting that official-sector purchases will continue accelerating throughout the remainder of 2026,” as reported by InvestorsHub.com. 

“Looking further ahead, Goldman expects central bank buying to average around 60 tonnes per month through 2026. The bank pointed to findings from its own central bank survey that showed ‘strong underlying interest in gold,’ adding that recent geopolitical tensions “are likely to reinforce diversification over time — both for central banks and private investors.”

Short-Term Weakness, Long-Term Opportunity

While Citi’s warning of a potential 20% decline by September may sound alarming, it reflects growing concerns that the precious metal has become vulnerable after a substantial run-up and amid rapidly changing geopolitical dynamics.

That said, short-term corrections are not uncommon in long-term bull markets. For investors with a longer investment horizon, any weakness in gold could ultimately present an opportunity rather than a reason to abandon the sector altogether. 

One of the biggest catalysts is the growing expectation that President Trump’s top Federal Reserve choice, Kevin Warsh, could usher in a more hawkish monetary policy stance. Markets have reacted quickly to that possibility, strengthening the U.S. dollar and weighing on assets like gold that typically thrive in lower-rate environments.

Warsh has publicly acknowledged the need for rate flexibility, but investors largely view him as less supportive of aggressive, immediate rate cuts compared to other potential Fed leaders. That perception matters. Even modest expectations of tighter monetary policy tend to push Treasury yields higher and boost the U.S. dollar. Both of those metrics are historically negative for gold prices.

In fact, speculation surrounding a “Warsh Fed” recently pushed the U.S. Dollar Index up by roughly 0.5%. A stronger dollar makes gold more expensive for foreign buyers, dampens global demand, and often pressures prices lower in the near term. For traders, that combination creates an environment where a short gold trade can make sense, especially after an extended rally.

This chart compares the daily LBMA fix gold price (gold) with the daily closing price for the broad trade-weighted U.S. dollar index (blue).

That doesn’t mean gold’s long-term thesis is broken. But even strong secular uptrends experience pullbacks, consolidations, and sentiment resets. For investors looking to capitalize on a potential short-term decline, inverse gold ETFs offer a straightforward way to make a short gold trade without using options or margin-heavy strategies.

Direxion Daily Gold Miners Index Bear 2x Shares ETF

With an expense ratio of 0.93%, the Direxion Daily Gold Miners Index Bear 2x Shares ETF (NYSEARCA: DUST) seeks to deliver 200% of the inverse of the daily performance of the NYSE ARCA Gold Miners Index. The fund also pays a quarterly dividend, which is unusual for a leveraged inverse ETF.

DUST has been in a prolonged downtrend, but that’s largely a function of gold’s extended rally. If gold pulls back, miners often fall faster than the underlying metal due to operating leverage, rising costs, and sentiment shifts. That dynamic can amplify returns during a short gold trade, albeit with higher risk.

Direxion Daily Junior Gold Miners Index Bear 2x Shares ETF

The Direxion Daily Junior Gold Miners Index Bear 2x Shares ETF (NYSEARCA: JDST) works similarly to the DUST ETF but focuses on junior gold miners, which tend to be even more volatile. With an expense ratio of 0.89%, the ETF targets 200% of the inverse of the MVIS Global Junior Gold Miners Index.

Junior miners typically have weaker balance sheets and higher sensitivity to gold prices. As a result, JDST can move aggressively during gold sell-offs. Like DUST, it has trended lower during gold’s rise, but a reversal in gold could spark a sharp, short-term rally.

ProShares UltraShort Gold ETF

For investors who want direct exposure to gold prices rather than miners, the ProShares UltraShort Gold ETF (NYSEARCA: GLL) offers another approach.

With an expense ratio of 0.95%, GLL aims to deliver 200% of the inverse of the Bloomberg Gold Subindex. While it has also struggled during gold’s uptrend, it may appeal to traders looking for a cleaner expression of a short gold trade without company-specific risks tied to mining stocks.

Final Thoughts: Timing Matters in a Short Gold Trade

A short gold trade isn’t about calling the end of gold’s long-term bull market. Instead, it’s about recognizing when macro forces — such as a strengthening dollar, shifting Fed expectations, and crowded positioning — create conditions for a pullback. Inverse ETFs like DUST, JDST, and GLL can provide tactical opportunities during these periods, but they require discipline and short time horizons. Leveraged products magnify both gains and losses, making risk management essential. For investors willing to stay nimble, the current environment may offer a compelling — if temporary — opportunity to bet against gold.