Key Takeaways
- Tuesday saw gold futures decline 0.2% to $4,400.50 per ounce amid U.S. dollar gains.
- Spot prices plummeted up to 2%, marking a roughly 21% retreat from the late-January high of $5,594.82.
- Market jitters increased following Saudi Arabia’s agreement to allow U.S. military use of King Fahd air base.
- Analysts from Standard Chartered and Global X ETFs maintain projections of $5,375–$6,000 per ounce by year’s end despite current weakness.
- Yardeni Research’s Ed Yardeni continues to forecast $10,000 per ounce before 2030.
The precious metal has officially crossed into bear market territory, declining more than 20% from its peak earlier this year. Yet, market experts argue this downturn could be temporary.
Spot prices tumbled as much as 2% during Tuesday’s session before recovering slightly, settling at $4,335.97 per ounce. Futures contracts decreased approximately 2% to $4,317.80. The yellow metal has retreated roughly 21% from its late-January record of $5,594.82.
Continuous gold futures experienced a 0.2% dip to $4,400.50 per ounce. Meanwhile, the U.S. Dollar Index climbed 0.4%, intensifying downward pressure on precious metals. Since gold trades in dollars, an appreciating greenback increases costs for international purchasers.
Gold has surrendered 17% of its value since early March, based on FactSet figures. The dollar index has appreciated roughly 3% since tensions with Iran escalated on February 28.
Part of Tuesday’s decline followed a Wall Street Journal article revealing Saudi Arabia’s decision to permit U.S. military forces to operate from King Fahd air base. This represented a departure from the kingdom’s previous stance against allowing its infrastructure to support operations in the Iran conflict.
Neil Welsh, metals division head at Britannia Global Markets, noted that markets continue showing heightened sensitivity to geopolitical shifts. Without clear signs of tension reduction, he expects gold market volatility to persist.
The selloff intensified after President Donald Trump announced Monday a five-day suspension of planned strikes targeting Iran’s energy sector. This development temporarily reduced geopolitical tensions that had been bolstering gold valuations.
Persistent Bullish Sentiment Among Market Experts
Despite the pronounced decline, numerous strategists view this as a temporary setback rather than a fundamental shift for gold. Their optimism stems from continued central bank accumulation, ongoing geopolitical risks, and expectations of dollar weakness.
Ed Yardeni, president of Yardeni Research, revised his year-end projection downward to $5,000 per ounce from $6,000. However, he informed CNBC that his decade-end target of $10,000 per ounce remains unchanged.
Justin Lin, investment strategist at Global X ETFs, established his year-end forecast at $6,000, describing the current pullback as “a compelling entry point for investors.” He attributed the decline to transient factors including elevated interest rates and portfolio adjustments.
Lin emphasized that his optimistic perspective doesn’t hinge on the Iran situation. Instead, he highlighted central bank accumulation and investment flows from Asian gold exchange-traded fund participants as primary catalysts.
Standard Chartered maintains a constructive stance on gold as well. Senior Investment Strategist Rajat Bhattacharya indicated the institution anticipates gold recovering toward $5,375 within the next three months after current selling pressure subsides. He identified technical support near the $4,100 threshold.
Central Bank Demand Expected to Provide Foundation
Emerging economy central banks have consistently accumulated gold as part of efforts to reduce dollar dependency. Lin suggested a “high likelihood” that central banks accelerate purchases following the recent price decline.
Bhattacharya noted that renewed U.S. dollar weakness would provide additional support for gold valuations. Market participants anticipate Federal Reserve interest rate reductions at some juncture, potentially weakening the dollar.
Standard Chartered identifies technical price support for gold around the $4,100 threshold.
