Geopolitical tensions in the Middle East have shaken global commodity markets, yet gold has failed to act as a traditional safe-haven asset, instead falling alongside risk assets. Despite this, several Wall Street analysts view the current sell-off as a short-term dislocation and maintain a bullish outlook for the medium to long term.

As of the latest update, spot gold was trading at $4,424.51 per ounce, down nearly 21% from the record high of $5,594.82 reached at the end of January, confirming a technical bear market. The immediate triggers for the decline include a stronger U.S. dollar and a temporary easing of geopolitical tensions—specifically, former President Trump’s announcement delaying a planned five-day strike on Iranian energy infrastructure, which prompted some investors to take profits.

Although gold’s recent performance diverges from the bullish narrative previously outlined by Wall Street, many market analysts characterize the pullback as a buying opportunity rather than a trend reversal. Yardeni Research President Ed Yardeni, while maintaining his long-term forecast of gold reaching $10,000 by the end of the decade, has slightly lowered his year-end target to $5,000 (down from $6,000). Standard Chartered expects gold to rebound to $5,375 within three months after the current deleveraging cycle ends. Bank of America Securities also predicts that the average gold price will rise quarter-over-quarter from the second to the fourth quarter of 2026, ranging between $4,500 and $5,750.

The synchronized decline of gold and risk assets highlights a shift from its traditional safe-haven role, reflecting deeper structural dynamics in market positioning.

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

This dominance of retail and momentum-driven holdings makes gold particularly vulnerable to declines during broad-based sell-offs in risk assets. Citigroup cited historical data showing that during major market downturns—such as the dot-com bubble burst, the 2008 financial crisis, and the pandemic—gold typically declined initially before rebounding, often bottoming out ahead of equity market stabilization.

Global X ETFs investment strategist Justin Lin attributed the current sell-off to "a combination of short-term interest rate sensitivity, portfolio rebalancing triggered by equity declines, and a degree of market complacency regarding the Iran conflict." He characterized the decline as "an attractive buying opportunity for investors" and maintained a year-end baseline forecast of $6,000 per ounce.

Citigroup further noted that rising real interest rates and a stronger U.S. dollar have also weighed on gold prices. Combined with forced selling by retail and ETF holders, these factors have intensified gold’s pro-cyclical correlation with other risk assets beyond historical averages.

Despite the recent sharp decline, institutional analysts remain optimistic about gold’s medium-term prospects, citing several structural supportive factors.

Justin Lin of Global X ETFs emphasized that his bullish stance "does not rely on war-related risk premiums but is based on broader factors including persistent geopolitical uncertainty, sustained central bank demand, and steady inflows from Asian gold ETF investors." He added that central banks are "highly likely" to increase purchases as prices decline, providing a floor for the market.

Rajat Bhattacharya, senior investment strategist at Standard Chartered, stated that the bank maintains a "constructive long-term view on gold, supported by structural factors such as strong demand from emerging market central banks and investor diversification needs amid geopolitical risks." He also highlighted that a weaker U.S. dollar should support gold prices, with market expectations for eventual Federal Reserve rate cuts serving as a key catalyst for dollar weakness.

Citigroup pointed out that the Iran conflict has significantly elevated global geopolitical and economic risks, reducing the likelihood of a "Goldilocks" scenario for U.S. interest rates and global growth. As a result, the bank has become more optimistic about gold’s medium-term outlook. Its base-case scenario (50% probability) projects a rebound to $5,000 per ounce; if the conflict prolongs and leads to a stagflationary environment reminiscent of the 1970s, the bullish scenario (30% probability) could push gold to $6,000 or even $7,000.

While the medium-term direction appears relatively clear, institutions like Citigroup caution that the optimal timing for buying gold depends more on the evolution of geopolitical conflicts than on specific price levels.

Maximilian Layton, global head of commodities research at Citigroup, noted that the "right time to buy gold depends on the path of events, not price levels." If the Iran conflict resolves within the next four to six weeks, the bank recommends waiting for broader risk asset stabilization and equity market bottoms before entering. If the conflict persists, a decline in real interest rates or a technical momentum reversal in gold prices would serve as more reliable buying signals.

Over the longer term, Citigroup emphasized that persistent "frictions" supporting gold prices remain in place—including sovereign debt risks, concerns over the erosion of U.S. dollar credibility, ongoing allocation of Chinese household savings into gold, and diversification demand from emerging market central banks. Bank of America Securities forecasts a year-end target of $5,750 per ounce, with an average price around $5,200 in the first quarter of 2027, noting that downside risks primarily stem from an unexpectedly rapid de-escalation of conflicts.

In summary, gold’s sharp correction has created a more attractive entry point for medium- to long-term investors. However, most institutions advise a cautious approach, recommending waiting for greater clarity on geopolitical developments and broader risk asset stability before increasing exposure.