Gold prices in a tug-of-war, is it time to “get on board”? Latest institutional analysis

       Since May, international gold prices have witnessed a tug-of-war between bulls and bears at the $4,500/oz threshold. According to Wind data, as of the latest close, London gold spot fell 0.75%, quoted at $4,508.930/oz; COMEX gold dropped 0.70%, quoted at $4,510.5/oz.

　　The ongoing volatility in the gold market has been driven by intertwined variables such as a potential shift in Federal Reserve policy, geopolitical tensions in the Middle East, a rebound in global inflation, and a trend of de-dollarization. These factors have investors caught in a dilemma: should they "get on board" now, or continue to wait for clearer signals?

　　

Hongyuan Futures notes that in the short term, a shift in Federal Reserve policy has become the key factor suppressing gold prices. April U.S. inflation data was stronger than expected, and combined with a robust job market, this completely overturned the market's optimism about Fed rate cuts and even raised expectations of a possible rate hike.

 

　　On May 22, Kevin Walsh was sworn in at the White House as the 17th Chair of the Federal Reserve. Known for his "strong anti-inflation" stance, Walsh differs fundamentally from Powell in policy approach. Cinda Futures indicates that the "Walsh Effect" has started to emerge but is not fully priced in yet. The market sees his policy trajectory as unfavorable for gold, which has directly pressured precious metal prices.

　　

Hongyuan Futures points out that the market has largely priced in the easing of geopolitical risks. Since the ceasefire between Israel, the U.S., and Iran took effect on April 8, and negotiations picked up in early May, gold and oil prices have shown a diminishing positive reaction to peace talks, and the geopolitical premium has gradually faded, making it difficult for such factors to drive a breakout in gold prices.

 

　　In addition, DBS Bank has observed a unique phenomenon: gold’s asset attributes have temporarily shifted, with its safe-haven properties weakened. Recently, gold has behaved more like a risk asset, with trends aligning more closely with bonds and equities. This change stems from both adjustments in inflation and interest rate outlooks triggered by the Middle East conflict and from crowded trading in the gold market in recent years—stellar performance over the past three years has attracted a surge of speculative funds. Now, these funds are under profit-taking pressure, heightening volatility.

　　“But short-term pressure has not broken the medium- to long-term support logic for gold; bullish factors are still in play.” This is the consensus among many institutions.

　　CITIC Securities Chief Macro Analyst Zhou Junzhi believes that the liquidity shock for gold in Q1 2026 is essentially a stress test on the global macro system in an environment of "high inflation, high leverage, and high conflict." The short-term fragility of safe-haven assets during liquidity crunches does not mean that the underlying logic is broken. In the medium to long term, global geopolitical competition structurally shifts monetary systems from prioritizing efficiency to prioritizing security, which will continue to provide gold with an independent premium apart from the real yields on U.S. Treasuries.

　　

Zhou Junzhi pointed out that the far-reaching impacts of Middle East geopolitics are not limited to short-term oil price fluctuations but also drive regionalization and defensive redundancy in global supply chains. Coupled with the fragmentation of the global financial settlement system (such as the rise of alternative payment systems), the currency system is evolving from a "dollar unipolar" to a "diversified reserves" model. The collapse in dollar credit will continue pushing up the central range for gold prices.

 

　　Despite intensified short-term volatility, institutions generally retain an optimistic view on gold’s medium- to long-term outlook. DBS Bank believes that the current shift in gold's asset attributes will not be permanent. As speculative funds exit and investor expectations readjust, gold will gradually return to its role as a traditional store of value, while the structural tailwinds of de-dollarization and currency depreciation remain strong. Based on this view, DBS Bank has raised its gold price targets: Q3 2026 to $5,000/oz, Q4 2026 to $5,300/oz, Q1 2027 to $5,600/oz, and Q2 2027 to $5,900/oz, reflecting strong confidence in the long-term trend.

　　For ordinary investors, the key to decision-making at the $4,500 tug-of-war barrier is to clarify their own investment horizon and risk appetite. Cinda Futures suggests that the current gold price is at the lower band of a wide oscillating range, and a directional breakout will require confirmation from both U.S.-Iran developments and Federal Reserve policy signals.

Editor: Wei Yihan