Gold prices experienced significant volatility recently, initially plummeting nearly 9% to a four-month low before a partial recovery. This selloff was primarily driven by macroeconomic factors, specifically the market reassessing expectations for Federal Reserve rate cuts in 2026, rather than escalating geopolitical tensions in Iran. A key shift in gold’s investment thesis is occurring, with accumulation by surplus countries, particularly China, now a more dominant driver than traditional safe-haven demand. Events impacting trade surpluses, like potential disruptions in the Strait of Hormuz, can limit gold accumulation and contribute to price weakness. Despite this change, analysts at Multiplo Invest maintain a ‘buy’ recommendation, viewing current conditions as a compelling entry point. However, technical analysis indicates a bearish bias below $4,500/oz, compounded by ongoing ETF outflows. Volatility is expected to continue as investors navigate geopolitical risks and evolving monetary policy expectations. Some analysts suggest selling options given extreme volatility levels.
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