Rising again! Gold prices return to $4,600, Wall Street: Pullback is a buying opportunity

Ask AI · Why Wall Street sees a gold price pullback as a buying opportunity?

Gold prices have returned to $4,600.

On March 25, during intraday trading, London spot gold briefly rose above $4,600 per ounce. As of the time of writing, London spot gold was $4,564.84 per ounce, up 2.08% on the day; COMEX gold was $4,555.7 per ounce, up 3.49% on the day.

Affected by this, some domestic brands of gold jewelry prices were also raised, with the per-gram rate returning to 1,400 yuan. On March 25, Chow Tai Fook’s 足金 jewelry was quoted at 1,418 yuan per gram, up 68 yuan for the day; Lao Feng Xiang’s price was 1,408 yuan per gram, up 63 yuan per gram for the day.

In China’s A-share market, gold-related stocks also moved broadly higher, with Chifeng Gold, Xiao Cheng Technology, Xingye Silver & Tin, Zhongjin Gold, and others jumping sharply.

According to a report by China Central Television, in local time on March 24, the U.S. government submitted to Pakistan a ceasefire-ending proposal to be presented to Iran, containing 15 conditions, covering its nuclear program, missile capabilities, and regional issues, while also ensuring that the Strait of Hormuz remains open. In exchange, Iran could receive comprehensive lifting of international sanctions, U.S. support for its civilian nuclear program development, and the removal of the “snapback sanctions” mechanism. The U.S. side is considering pushing for a one-month ceasefire to allow further negotiations on the above terms.

Why has gold’s “safe-haven” role “failed”?

Since the outbreak of the U.S.-Iran war, gold prices have not risen but fallen. This past Monday, spot gold briefly slipped below $4,100 per ounce, more than a 20% drop from the $5,608 record high set in January, falling to around $4,098 at one point. It has been seen as entering a technical bear market.

This trend has left many investors puzzled: when geopolitical risk has rapidly intensified, why is gold—traditionally a safe-haven asset—continuing to decline instead?

Market views hold that gold’s safe-haven attribute has not truly failed; it has merely been suppressed in the short term by stronger macro variables.

UBS Global Wealth Management attributed gold’s recent decline to weaker investor confidence in Fed rate cuts, reduced market speculative momentum, and similar factors. Currently, the market focuses more on the chain of “oil price rising—driven inflation—Fed maintaining tight policy,” rather than the path of “oil price shock—economic slowdown—policy shift.” This single narrative has significantly weakened gold’s macro-hedging properties in the short term.

UBS analyst Wayne Gordon said that for many investors, gold has appeared relatively bland amid rising geopolitical tensions and heightened price volatility—seemingly contrary to intuition. However, history shows that especially in the initial stages of conflicts, gold does not always rise. A clear conclusion is that gold’s price trend is often not driven directly by the conflict itself, but by policy and economic backdrop. As the market adapts to expectations of higher interest rates and a stronger U.S. dollar, gold’s value-preservation role in the early part of the cycle has faced pressure. But this is not a failure of gold’s safe-haven performance—it is a delay.

Citi’s report noted that over the past 12 months, momentum-driven buying led by retail and ETF investors has been the core force pushing gold prices to keep rising since $2,500 per ounce, while central banks’ gold-purchase volumes have basically stayed stable over the past two to three years. This positioning structure—dominated by retail and retail momentum capital—means gold is easily forced to fall in tandem when risk assets undergo large-scale sell-offs.

Citi further pointed out that rising real rates and a strengthening dollar have also weighed on gold prices, and combined with passive de-risking by large numbers of retail and ETF holders, gold’s “pro-cyclical” linkage with other risk assets has been more extreme than its historical average.

Renowned Wall Street economist and CEO of Europe Pacific Capital, Peter Schiff, believes that gold’s current selling is reenacting the script of the “2008 global financial crisis.” He criticized the logic behind this sell-off, arguing that traders made a fundamental mistake—selling gold due to concerns that persistent inflation would prevent the Fed from cutting rates.

“With interest rates already too low, it makes no sense to sell gold because rising inflation will prevent the Fed from cutting rates. Lower real rates are good for gold, but what really needs rate cuts is the stock market.” Schiff predicted that once high interest rates push the economy into a recession, the Fed will change strategy—cut rates and restore quantitative easing policies—and this move would be a strong positive for gold.

The market is uneasy about whether a ceasefire or a peace agreement would reduce gold’s geopolitical premium. Schiff firmly pushed back on this. He said that if the war ends quickly, that would be negative for gold, but it would not be enough to offset all the positive factors. In addition, governments still need to pay for additional weapons and the costs of rebuilding destroyed areas, so compared with a situation where no war ever occurred, the fiscal deficit and inflation would be larger.

Institutions stay bullish

Despite near-term pressure, most institutions remain optimistic about gold’s medium- to long-term outlook.

UBS analyst Giovanni Staunovo said that in recent years, the structural drivers that have pushed gold higher—issues related to debt, political pressure calling for Fed rate cuts, high inflation, low interest rates, a weaker dollar, and so on—still exist and have not changed.

In Gordon’s view, if history can be used as a reference, negative views on gold’s future outlook may be premature. “Because the market is adapting to expectations of higher interest rates and a stronger dollar (which are short-term headwinds to gold prices), gold’s value-preservation role in the early stage of the cycle has come under pressure. But this is not gold’s safe-haven performance failing—it’s a delay.”

Scotiabank’s senior investment strategist Rajat Bhattacharya also said the bank has remained constructive on gold over the long term, supported by structural factors, including strong demand from central banks in emerging markets and investors’ demand for diversified allocations under geopolitical risk. He also emphasized that weakness in the dollar should support gold prices again, and that market expectations for the Fed’s eventual rate cuts are precisely the key catalyst pushing the dollar lower.

Citi said that “the timing to buy gold depends on the path, not the price level.” If the Iran conflict ends within the next four to six weeks, it suggests waiting until risk assets stabilize overall and after the stock market bottoms before entering; if the conflict lasts longer, when real rates start falling or gold shows a technical momentum reversal would be more reliable buy signals. Over a longer cycle, the “frictions” that drive gold prices higher over the long term always exist—concerns about sovereign debt risk, fears that the credibility of the U.S. dollar will be passively diluted, Chinese residents’ savings continuing to allocate into gold, and increased needs for reserve diversification from central banks in emerging markets all form persistent forces supporting prices.

Bank of Montreal maintains a long-term bullish stance on gold. The bank’s commodity analyst said that the Iran conflict has not weakened the structural bull-market logic for the metals and mining sector; instead, it further reinforces that logic. The only issue right now is when the market can regain enough confidence that the conflict is heading toward resolution, so that risk exposure can be increased again. Bank of Montreal expects the average gold price in Q3 2026 to reach $4,800 per ounce, rising to $4,900 per ounce in Q4, with an average for the full year of $4,846 per ounce. Looking even further out, BMO expects the gold price in 2027 to stay stably above $5,000 per ounce, with a projected full-year average price of $5,125 per ounce—an increase of 26% from the prior forecast.

Global X ETFs investment strategist Justin Lin said that the current sell-off is driven jointly by near-term interest-rate sensitivity, portfolio rebalancing triggered by the stock market’s decline, and to some extent market complacency about the Iran conflict—and the sell-off should be categorized as “an attractive buying opportunity for investors,” keeping his year-end benchmark forecast of $6,000 per ounce.

Scotiabank expects that within three months after the end of this deleveraging cycle, gold prices could rebound to $5,375. BofA Securities forecasts that average gold prices in Q2 to Q4 2026 will rise quarter by quarter, staying in the $4,500 to $5,750 range, with a target price of $5,750 per ounce at year-end. The average in Q1 2027 is expected to be near $5,200 per ounce.