Key Takeaways
- Gold futures declined 0.2% to $4,400.50 per ounce on Tuesday amid U.S. dollar gains.
- Spot prices for the precious metal tumbled as much as 2%, marking a roughly 21% retreat from the late-January high of $5,594.82.
- Market nerves increased following reports that Saudi Arabia authorized U.S. military use of King Fahd air base.
- Analysts at Global X ETFs and Standard Chartered continue to project gold could hit $5,375–$6,000 before year-end.
- Yardeni Research’s Ed Yardeni stands by his decade-end forecast of $10,000 per ounce.
The precious metal has tumbled into bear market territory after sliding more than 20% from its peak in January. Yet multiple market strategists argue the downturn could be temporary.
Spot gold experienced a decline of as much as 2% on Tuesday before recovering somewhat, settling at $4,335.97 per ounce. Futures contracts fell approximately 2% to $4,317.80. The metal has now retreated roughly 21% from its late-January zenith of $5,594.82.
Continuous futures for gold also experienced a 0.2% slip to $4,400.50 per ounce. The U.S. Dollar Index climbed 0.4%, creating headwinds for the yellow metal. Since gold trades in U.S. dollars, a strengthening greenback increases costs for international purchasers.
Gold has shed 17% of its value since early March, based on FactSet figures. The dollar index has advanced approximately 3% following the outbreak of conflict with Iran on February 28.
Tuesday’s decline was partially attributed to a Wall Street Journal article reporting Saudi Arabia’s agreement to allow U.S. military forces access to King Fahd air base. This development represented a departure from the kingdom’s previous stance that its infrastructure would remain off-limits during the Iran confrontation.
Neil Welsh, metals division head at Britannia Global Markets, noted that markets continue to show extreme sensitivity to geopolitical shifts. Without any visible route toward conflict resolution, he indicated traders should anticipate ongoing price swings in the gold sector.
The sell-off intensified after U.S. President Donald Trump announced on Monday a five-day suspension of planned attacks on Iran’s energy facilities. This announcement helped reduce some of the geopolitical anxiety that had been bolstering gold valuations.
Bullish Forecasts Remain Intact
Despite the pronounced decline, numerous market experts don’t view this as a fundamental shift for gold. They highlight central bank purchasing, geopolitical instability, and expectations of dollar weakness as justifications for maintaining optimistic positions.
Ed Yardeni, president of Yardeni Research, adjusted his year-end projection downward to $5,000 per ounce from $6,000. However, he informed CNBC that his extended-term prediction of $10,000 per ounce by decade’s end remains unchanged.
Justin Lin, investment strategist at Global X ETFs, established his year-end projection at $6,000, characterizing the recent pullback as “a compelling entry point for investors.” He suggested the sell-off stems from short-term influences including elevated interest rates and portfolio adjustments.
Lin emphasized that his optimistic perspective doesn’t hinge on the Iran situation. He pointed to central bank accumulation and capital flows from Asian gold exchange-traded fund participants as the primary catalysts.
Standard Chartered maintains its constructive stance on gold. Senior Investment Strategist Rajat Bhattacharya indicated the institution anticipates gold recovering toward $5,375 within the next three months, after the current selling pressure subsides. He identified technical support in the vicinity of $4,100.
Central Bank Demand Provides Foundation
Emerging market central banks have been accumulating gold consistently while reducing dollar exposure. Lin stated there’s a “high likelihood” that central bank acquisitions will accelerate following the recent price decline.
Bhattacharya noted that dollar weakness would provide renewed support for gold valuations. Market participants anticipate Federal Reserve rate reductions at some juncture, which could exert downward force on the dollar.
Standard Chartered identifies technical support for gold in the $4,100 range.
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