Gold prices experienced significant volatility recently, initially plummeting nearly 9% to a four-month low before partially recovering. This dramatic movement was triggered by shifting expectations regarding Federal Reserve rate cuts, with markets now pricing out cuts in 2026, and a temporary de-escalation of tensions surrounding the conflict in Iran. While geopolitical events initially spurred a sell-off, analysts note a changing investment thesis for gold, moving away from traditional safe-haven demand linked to risk-on/risk-off sentiment. Instead, gold’s performance is increasingly driven by accumulation from surplus countries, particularly China. Despite this shift, some analysts maintain a buy recommendation, viewing the dip as a compelling entry point. However, bearish sentiment prevails below the $4,500/oz level, exacerbated by persistent ETF outflows. The market remains sensitive to macroeconomic factors, particularly interest rate policy, and geopolitical developments, suggesting continued volatility.
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