The momentum trades of 2026 are breaking with gold, silver and South Korea down big
The recent turmoil in the global markets has seen a significant downturn in some of the year’s hottest trades. Gold, silver, and South Korea have all experienced sharp declines as fears surrounding the ongoing conflict in Iran persist.
Gold prices have slid by more than 5%, with spot gold now trading at $5,041.81 per ounce and gold futures dropping to $5,049. Despite this decline, gold is still up by over 16% for the year. Similarly, silver prices have tumbled by over 8%, with futures tied to the commodity now at $81.23 per ounce, up by 15% year to date. South Korea has also witnessed a significant drop, with the iShares MSCI South Korea ETF (EWY) plunging by 14%, although it remains higher by nearly 30% for the year.
These trades were initially seen as momentum plays in 2026, attracting investors looking to diversify away from U.S. large-cap tech stocks. With the S&P 500 down by 1% this year after a 64% cumulative increase over the past three years, many turned to assets like gold, silver, and South Korea for better market performance.
Each of these assets has its own unique appeal. Gold is seen as a safe haven asset, with central banks diversifying away from the U.S. dollar and bullish predictions of gold surpassing $6,000 an ounce. Silver is expected to benefit from tight supply-demand dynamics and its industrial use cases, particularly in artificial intelligence. South Korea’s outperformance is largely attributed to the global demand for memory, boosting shares of companies like Samsung Electronics and SK Hynix.
However, the recent escalation of tensions in Iran has led to a broader market sell-off, with investors fearing inflation and spiking oil prices. Brent crude oil has surpassed $84 a barrel, while WTI crude has risen above $77. Even traditionally safe assets like gold have been caught up in the selling frenzy, as investors indiscriminately dump assets they perceive as overvalued.
As the markets continue to navigate through uncertainty, it is essential for investors to stay informed and agile in their decision-making. Keeping a close eye on geopolitical developments and market trends will be crucial in managing risks and seizing opportunities in these volatile times.
