ANZ strategists Soni Kumari and Daniel Hunes suggest the recent dip in gold prices may be short-lived. In their latest report, they note that although the US dollar has rebounded due to its safe-haven status, the currency remains overvalued and this strength is likely temporary. They emphasize that the Federal Reserve is unlikely to reverse its monetary policy stance, as disinflation trends remain intact. While rising oil prices increase the possibility of renewed inflationary pressures, this is expected to be transitory. ANZ's base case scenario projects the Fed's policy rate will fall to 3.0% by the end of December 2026. They add that lower interest rates and a weaker US dollar should support investment flows into the gold market.

Further analysis indicates the recent gold price correction is primarily driven by a rebound in the US dollar index to around 99.5, coupled with elevated oil price volatility amplifying short-term inflation expectations, prompting some investors to take profits. Latest futures data show spot gold prices stabilizing around $5,180 per ounce, down approximately 7% from the historical high above $5,600 in January, but with moderately increased trading volume indicating strong buying support. Soni Kumari and Daniel Hunes further stated in a recent research report, "Central bank demand for gold may expand further this year, with no signs of reversal in structural support." This view aligns with the trend of central bank gold purchases amid ongoing geopolitical uncertainty, reinforcing gold's role as a long-term safe-haven asset.

From a medium-to-long-term perspective, the Federal Reserve's policy path remains the core driver of gold prices. With the current federal funds rate maintained in the 3.50-3.75% range, market pricing indicates ample room for cumulative rate cuts before the end of 2026. ANZ's 3.0% target is more optimistic than market consensus and would significantly reduce the opportunity cost of holding gold. The logic of dollar overvaluation is equally critical: despite the short-term safe-haven rebound in the DXY, fundamental analysis suggests it faces downward pressure amid diverging global economic growth, with expectations for a gradual decline to the low-90s range by 2026. Historical data shows that gold often achieves double-digit gains during similar periods of dollar weakness. While oil price-driven inflationary pressures temporarily push yields higher, the disinflation trend remains intact, and central banks are unlikely to hastily tighten policy. A recovery in industrial and investment demand from major Asian economies further enhances gold's allocation appeal, with expected investment inflows poised to push prices back to higher levels.

The data highlights the decisive support for gold from anticipated Fed rate cuts and dollar movements. The short-term correction provides a buying opportunity, with medium-term bullish logic strengthening, though risks such as unexpectedly persistent oil price increases or a more hawkish Fed stance require vigilance. Overall, ANZ strategists' optimistic assessment underscores gold's continued value in the current macroeconomic environment, with expected investment inflows set to dominate the price recovery path. The recent gold price dip stems from temporary dollar and inflation factors, but ANZ expects Fed easing and a weaker dollar to provide substantial support. Market participants should monitor policy data developments to capture structural opportunities.