Gold Falls Into Technical Bear Market, Wall Street Bucks the Trend with Optimism: Long-Term Logic Unchanged, Pullbacks Present Buying Opportunities

Middle Eastern tensions shake the global commodities markets, but gold has failed to serve its traditional safe-haven role, instead declining alongside risk assets. Nevertheless, many Wall Street analysts view this round of selling as a short-term misalignment and maintain a bullish outlook for the medium to long term.

As of press time, spot gold is priced at $4,424.51 per ounce, nearly 21% below the January peak of $5,594.82, confirming a technical bear market. The immediate cause of this decline was the strengthening dollar combined with a temporary easing of geopolitical tensions—Trump announced a delay in a planned five-day strike against Iran’s energy infrastructure, prompting some investors to take profits.

Although gold prices are diverging from the bullish scenario previously painted by Wall Street, many market analysts still see this correction as a buying opportunity rather than a trend reversal. Ed Yardeni, president of Yardeni Research, has slightly lowered his year-end target from $6,000 to $5,000, while maintaining his long-term forecast of gold reaching $10,000 by the end of this decade. Standard Chartered expects gold to rebound to $5,375 within three months after this deleveraging cycle ends. Bank of America Securities also predicts that the average gold price will rise quarter by quarter from Q2 to Q4 2026, reaching between $4,500 and $5,750.

Gold Falls Alongside Risk Assets, Underlying Drivers Emerge

The simultaneous decline of gold and equities breaks the traditional safe-haven expectation, reflecting deeper structural factors in investor positioning.

A Citigroup research report dated March 23 states that the momentum-driven buying by retail investors and ETFs over the past 12 months has been the core driver behind gold’s rise from $2,500 per ounce, while central bank gold purchases have remained relatively stable over the past two to three years.

This retail and retail-momentum-driven positioning makes gold highly susceptible to being dragged down during large-scale sell-offs in risk assets. Citigroup cites historical data indicating that, whether during the dot-com bubble burst, the 2008 financial crisis, or pandemic shocks, gold typically exhibits a “sell first, then rally” pattern during major market corrections, often bottoming out before stocks stabilize.

Justin Lin, investment strategist at Global X ETFs, states that the current sell-off is “driven by short-term interest rate sensitivity, portfolio rebalancing triggered by stock declines, and market complacency regarding Iran tensions,” and considers this a “compelling buying opportunity,” maintaining a baseline forecast of $6,000 per ounce by year-end.

Citigroup further notes that rising real interest rates and a strengthening dollar also weigh on gold, compounded by passive reductions by retail and ETF holders, making gold’s “procyclical” correlation with risk assets more extreme than historical averages.

Structural Factors Support Mid-term Bullish Outlook for Gold

Recent sharp declines in gold prices have not shaken institutional analysts’ optimistic view of its medium-term trajectory, which is based on several structural factors.

Justin Lin of Global X ETFs explicitly states that his bullish stance “does not rely on risk premiums related to war, but is built on ongoing geopolitical uncertainties, sustained central bank gold demand, and stable inflows from Asian gold ETF investors.” He adds that as gold prices retreat, central banks are “more likely to increase their gold purchases,” providing a potential floor for the market.

Rajat Bhattacharya, senior investment strategist at Standard Chartered, says the bank remains “constructively long-term on gold, supported by structural factors including strong demand from emerging market central banks and diversified allocations by investors amid geopolitical risks.” He emphasizes that a weakening dollar should further support gold prices, with market expectations of a final rate cut by the Federal Reserve acting as a key catalyst for dollar weakness.

Citigroup notes that heightened geopolitical and economic risks from Iran have significantly increased the likelihood of a long-term scenario similar to stagflation in the 1970s, reducing the probability of the “Goldilocks” environment of low rates and global growth. Its baseline scenario (50% probability) expects gold to rebound to $5,000 per ounce; a longer conflict leading to stagflation could push prices to $6,000 or even $7,000 under a 30% bullish scenario.

Gold Bottoming “More About Path than Price,” Long-term Support Remains

Despite a relatively clear medium-term outlook, institutions like Citigroup emphasize that the timing of gold’s buy signals depends on the evolution of geopolitical conflicts, not just price levels.

Maximilian Layton, head of global commodities research at Citigroup, states in a report that gold’s “buy timing depends on the path, not the price.” If the Iran conflict ends within four to six weeks, they recommend waiting for risk assets to stabilize and stocks to bottom before entering; if the conflict persists longer, a decline in real interest rates or a technical momentum reversal in gold would be more reliable buy signals.

Looking at longer cycles, Citigroup highlights that the “frictions” supporting long-term gold appreciation—such as sovereign debt risks, passive dilution of dollar credit, Chinese household savings shifting into gold, and emerging market central bank reserves diversification—remain persistent. BofA Securities projects a year-end target of $5,750, with an average of around $5,200 in Q1 2027, with downside risks mainly if the conflict resolves more quickly than expected.

Overall, the deep correction in gold creates more attractive entry points for medium- and long-term investors, but most institutions advise caution and patience until geopolitical tensions clarify and risk assets stabilize.