Key insights
- Gold prices are experiencing a near-term slump, trading below key technical indicators and facing headwinds from geopolitical tensions (Strait of Hormuz) and potential Fed rate hikes due to inflation. While long-term bullish arguments based on debt and central bank buying persist, the immediate outlook is muted. This suggests a cautious sentiment for risk assets as inflation concerns and monetary policy expectations weigh on commodity prices, potentially signaling broader market caution.
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It's been a rough year for gold bulls.
Futures have been sliding from record highs around $5,600 per ounce in January, and some think the near-term outlook for the precious metal may not improve for months. According to Citi Research, gold is trading below its 200-day moving average, a technical gauge some use to measure market momentum, for the first time in nearly three years. That's a sign that the wind—after a 2025 in which it rose more than 65%—has gone out of its sails: Gold, recently around $4,300, is pretty much where it started the year.
If gold analysts' long-term views prove correct and precious metal prices reach record highs again, the implied upside from recent prices is about 15%.
It's unlikely to go anywhere in the near term between the impasse over the Strait of Hormuz and gold in the thick of what Citi analysts said is a slow season for demand for jewelry, bars, and coins. Yet some analysts are maintaining their bullish views, and pushing their expectations down the road, because the underlying reasons for gold's strength seen last year—among them the debasement trade, high government debt levels, and optimism about increased central bank buying of gold—remain intact.
Citi's Kenny Hu attributes much of the weakness in gold to a host of issues stemming from the war in Iran, which has stoked inflation that has contributed to increased expectations that the Federal Reserve might raise interest rates. Higher rates can make interest-bearing assets more attractive than gold, which doesn't pay a dividend; they can also increase the demand for dollars, which can weigh on gold purchases by international buyers.1
"Dip buying here makes sense only with a strong view of no re-escalation of the war and resumption of [Straight of Hormuz] flows," Hu said. He cut his three-month price target by $300 to $4,000, though he left unchanged his $5,000 six-to-12-month price target.
"Gold's high liquidity makes it a natural source of cash if private investors face liquidity needs -- for example, if equity markets sell off amid higher rates and weaker growth expectations linked to geopolitical risks," Goldman Sachs analysts wrote last month. Their forecast for gold is more bullish, at $5,400.
DataTrek's Nicholas Colas and Jessica Rabe said gold's lackluster performance lately can be explained simply: It "rallied too far, too fast" last year and into early 2026. 2 The pair remains bullish on gold over the longer term, but they expect the precious metal will "likely underperform stocks" in the next six to 12 months, they said.
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