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The recent path of the gold price has been as hard to follow as the Middle East war. Just when hostilities seem to be easing, and the precious metal’s market is stabilising alongside those hopes for peace, someone launches missiles or drones again, and, on cue — oil goes up, and gold heads the other way.
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Despite this ongoing uncertainty, gold specialists continue to remain bullish about the mid and long-term price destination after gold’s price rose from US$3,335 to US$4,732 per troy ounce from May CY25 to May CY26.
While the Middle East conflict has undoubtedly had an impact, it’s the potential of higher inflation and rate hikes that have long-term investors most nervous.
That being said, major gold market followers like Goldman Sachs remain confident about the precious metal’s future. The international banker is confident gold will still reach US$5,400 per troy ounce by year-end on central bank demand and projected stronger official-sector buying through CY26.
The bank forecasts central bank purchases may average 60 tonnes per month in CY26.
Elsewhere, JPMorgan has lowered its CY26 gold price forecasts somewhat, but still tips gold prices to approach US$6,000 per ounce by year-end.
In the short term, JP Morgan has lowered its average CY26 gold price forecast to US$5,243 per ounce from US$5,708 previously.
Swiss banker UBS has also reduced its year-end CY26 gold price forecast from US$5,900 to US$5,500 per ounce, citing risks of persistent headwinds.
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Meanwhile, Joe Cavatone and John Reed told a World Gold Council (WGC) online audience that while the Middle East remains in turmoil, there was a notable reduction in market volatility from the first quarter.
The highlight of trading during that period was the increased role of investors in gold demand over the past eighteen months.
Despite recent calmness, they anticipate further volatility and corrections, offering investment opportunities. They also discussed gold’s role as a safe haven and liquidity vehicle, noting the role of Western investors’ profit-taking and Eastern investors’ continued gold accumulation.
In the short term, Mr Reed is tipping there will be more volatility and corrections, offering opportunities for both buying and selling gold.
Mr Reed also added gold often sees periods of profit-taking followed by safe haven buying, citing historical examples like the global financial crisis and early COVID stages.
He noted the current strength in equity markets, suggesting investors are relatively sanguine about the situation.
Mr Cavatone highlighted the shift from expected rate cuts to heightened inflation risks, with Western central banks considering rate hikes.
Both speakers agreed on the importance of monitoring gold demand trends and market factors in the coming months, with the potential for inflationary pressure to affect both emerging and developed markets.
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The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
