Gold is at a crossroads: a drop to $3,500 or a skyrocketing rise?
Gold prices continue to decline under the weight of rising real returns and the strength of the dollar despite the escalation of geopolitical tensions in the Middle East, while the expectations of analysts and major banks for the course of the yellow metal during the coming period vary.
And today, Thursday, it declined Gold prices in spot transactions rose by 1% to $4,476.51 per ounce, while gold futures contracts in the United States fell by 2.1% to $4,457.
Gold had recorded the highest level in its history last January, when the price touched the level of $5,600 per ounce, and since then, gold has witnessed continuous declines, with its losses in one month reaching about 15%.
This decline reflects a re-evaluation of the influencing factors, as they prompted Oil prices High inflation expectations are higher, raising the real yields on 10-year US Treasury bonds to about 2.01% according to the Treasury inflation-protected bond index, a level that analysts see as limiting the long-term gains of the yellow metal.
"War bonus" In testing macroeconomic forces
says Kelly Shaw, commodities and energy strategist at… "Alpine Macro"The current escalation in the Middle East has led to a sharp rise in energy prices, increasing inflation expectations and pushing real yields higher. She adds: "This shift has created a clear headwind for gold, as macroeconomic forces have overshadowed the traditional geopolitical risk premium"
Xu indicates that gold will continue its path under the pressure of the tightening monetary policies adopted by major central banks, including the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan, which have kept interest rates steady while tightening their trends.
Two different scenarios for the future of gold
According to Xu, the path of gold during the remainder of 2026 depends on the development of real returns and geopolitical risks. And the dollar. In the negative scenario, gold may fall to a range between $3,500 and $4,000 per ounce as real yields remain high and monetary policy is restricted.
As for the positive scenario, it requires a significant decline in real yields due to weak growth and increased expectations of monetary easing, which may return gold to an upward path to reach between $5,500 and $6,000.
Xu confirms that gold remains under pressure as long as US real yields remain positive at the level of 2% or Higher.
Gold is in a phase of reset, not a collapse.
For his part, Trevor Yates, chief investment analyst at… "GlobalX"The current correction reflects the markets’ focus on the inflationary effects of rising energy prices, with a sharp rise in Treasury bond yields and the dollar. He describes the decline as "A repositioning rather than a trend breakdown"considering that it may constitute a buying opportunity.
Yates points out that any continued rise in energy prices may push the markets into stagflation, an environment in which gold has historically performed strongly.
Liquidity Demands Pressure on Reserves
Presented by Edward Yardeni, President of… "Yardini" Research has a more cautious view, as the recent decline in gold prices was attributed to the rise in the dollar since the beginning of the war in Iran, in addition to the tendency of countries to increase defense spending and transfer payments to companies that accept foreign currencies instead of gold.
Yardeni reduced his target for the price of gold by the end of the year to $5,000 from $6,000, while maintaining the long-term target at $10,000 by the end of the decade.
Forecasts of major investment banks
Gold price forecasts
vary Expectations of major banks for the price of gold by the end of 2026, as the Bank expects… "Goldman Sachs" $5,400 per ounce, expected "Morgan Stanley" $4,800 by Q4, either "JP Morgan" The price of gold is likely to reach $6,300 per ounce by the end of the year.
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