After a deep correction lasting approximately two and a half months, with a magnitude of 20% to 25%, gold has now risen for three consecutive days, climbing back above $4,300 and standing at a potential turning point.

On June 15th, two major financial institutions, Barclays and Citigroup, issued statements. The former explicitly called for "increasing gold exposure," while the latter raised its three-month gold price target from $4,000 to $4,500 per ounce. The shared view from both institutions is that this correction appears more like a price reset rather than the end of the bull market.

The core catalyst triggering this optimistic outlook is the announced signing of a Memorandum of Understanding (MoU) between the US and Iran, scheduled for this Friday.

According to Citigroup research, this development is expected to facilitate the normalization of trade flows through the Strait of Hormuz by mid-to-late July, shifting the oil market's focus back to weak supply and demand fundamentals. The bank has consequently revised down its Brent crude forecasts for Q3 2026 through 2027 to $75, $70, and $65 per barrel, respectively, from previous projections of $110, $90, and $80.

Citigroup believes that easing geopolitical tensions will help alleviate inflationary pressures, potentially causing the key macroeconomic headwinds that previously weighed on gold to gradually subside. The bank maintains its bullish six-to-twelve-month forecast of $5,000 per ounce but cautions that gold prices still face significant volatility risks.

Barclays conducted a comprehensive review of the recent decline from three perspectives: currency, equity strategy, and derivatives. The bank attributes the sharp adjustment to a combination of factors: the US dollar strengthening by approximately 2.5%, the S&P 500 rising over 10%, and the concentrated unwinding of crowded long positions.

However, the medium-term support factors remain intact: persistently high inflation, ongoing policy uncertainty, and the strategic need for reserve diversification by central banks globally. Once geopolitical pressures stabilize, these factors are expected to reassert their dominance over gold's direction.

Barclays estimates that for every 1 percentage point increase in US CPI, the gold price rises by approximately 5%. This inflation transmission mechanism is seen as a core driver for the current rebound.

Furthermore, according to the World Gold Council's (WGC) 2026 Central Bank Gold Reserves Survey released on Tuesday, among 74 responding central banks, 45% indicated plans to increase their gold reserves over the next 12 months, marking a record high for the survey since its inception in 2018. Only 1% of institutions planned to reduce holdings. Concurrently, 89% of respondents believe global central bank gold reserves will continue to increase over the coming year.

Shaokai Fan, Head of Global Central Banks at the WGC, noted that the price decline is providing an entry opportunity for some central banks. He pointed out that in 2025, several central banks had cited high prices as a reason to wait for a better buying opportunity, and the current correction might represent that window.

US-Iran Memorandum: A Key Catalyst Emerges, Oil Price Expectations Shift

According to Citigroup research, the breakthrough in US-Iran negotiations is viewed as one of the most significant commodity market events this year. The bank notes that while the market has priced in the news of the signing, it has not fully priced in the scenario of a sustained medium-term recovery in Strait of Hormuz traffic. If it had, current crude oil prices would be approximately $10 to $15 per barrel lower, suggesting further downside potential.

Citigroup's base case scenario (60% probability) is that following the formal MoU signing, negotiations continue, leading to a paper supply surplus of about 4 million barrels per day in the oil market by 2027, with prices likely falling below $70 per barrel. The bank also outlines two tail scenarios: a bullish one (20% probability) involving a brief easing followed by renewed conflict, and a bearish one (20% probability) involving rapid capacity ramp-ups in the UAE, Saudi Arabia, and Iran coupled with a Russia-Ukraine ceasefire agreement.

The spillover effect of declining oil prices directly benefits precious metals. Citigroup argues that energy inflation shocks from Middle East conflicts were a key source of pressure on gold—high oil prices boosted inflation expectations, forcing central banks to maintain hawkish stances and limiting the decline in real interest rates. As oil price pressures ease, this transmission chain could gradually reverse, opening an upward path for gold.

Barclays' Perspective: A Reset, Not a Conclusion

Barclays research notes that gold had gained over 100% since January 2024, peaking near $5,500 per ounce in January this year before undergoing a roughly 25% correction, pulling prices back to November 2025 levels.

Barclays points out that this adjustment was not surprising given the previously overextended technicals and clear overvaluation relative to macro factors, particularly real interest rates.

From a valuation perspective, the bank's team states that gold prices have returned to around the $4,150 per ounce range estimated by its fair value model. This model identifies US CPI, the S&P 500, the US Dollar Index, and central bank gold buying demand as the four core drivers of gold prices.

This year, the simultaneous strength of the US dollar and equities has exerted negative pressure on gold. Concurrently, some emerging market central banks sold gold reserves to stabilize their currencies during the Middle East conflict, adding extra selling pressure and further depressing the price.

In the options market, according to Barclays' derivatives strategy team, market positioning and option pricing indicators have normalized significantly from extreme levels seen earlier in the year.

Most notably, call option implied volatility has reversed from a deep premium at the start of the year to its lowest level in nearly a decade, while put option skew has risen to a near-decade high due to increased hedging demand. This structural shift implies that the cost-effectiveness of using options to capture asymmetric upside potential has improved significantly. The overall clearing of market sentiment also lays a healthier technical foundation for a new upward move.

The Enduring Impact of Inflation: Gold's Strongest Structural Support

Barclays views US inflation as the dominant variable for gold's medium-to-long-term trajectory.

Its model estimates that for every 1 percentage point rise in US CPI, the gold price increases by about 5%. This suggests that the cumulative inflationary impact of Middle East energy shocks, even after oil prices eventually decline, will be embedded in gold's upward logic in the form of persistent inflation.

From a broader structural perspective, Barclays believes multiple long-term tailwinds remain intact. First, the ongoing trend of de-dollarization is gradually eroding demand for US dollar reserves. Second, developed market central banks' long-term tendency to tolerate inflation slightly above target will persistently erode fiat currency purchasing power. Third, monetary depreciation expectations stemming from fiscal deficit expansion and tariff policies provide gold with additional premium support beyond historical correlations.

Central Bank Gold Buying Intent Hits Record High

Data on central bank gold purchases also indicates that structural demand remains robust.

According to the latest World Gold Council (WGC) data, central bank gold purchases (in ounces) increased by 17% quarter-over-quarter in Q1 2026, and by 38% in dollar terms due to high gold prices. Among 74 responding central banks, 45% stated plans to increase gold reserves over the next 12 months.

The primary buyers in the first quarter were the central banks of Poland and Uzbekistan. The world's largest stablecoin issuer, Tether, also continued to accumulate, purchasing 12.6 tonnes in Q1, bringing its total reserves to 154 tonnes. Its buying scale ranked fourth globally, surpassing that of most major central banks. Turkey and Russia were notable net sellers due to currency stabilization needs.

Barclays believes that as geopolitical tensions stabilize, emerging market central banks that previously sold gold reserves may resume accumulation.

Among the 74 responding central banks, 74% believe the US dollar's share of global reserves will experience a moderate or significant decline over the next five years. Meanwhile, respondents generally expect the reserve shares of the euro and Chinese renminbi to remain largely unchanged, while gold holdings are projected to continue rising.

Regarding the core motivations for holding gold, performance during crises, portfolio diversification, and inflation hedging ranked as the top three. Hedging against geopolitical risks and reserve diversification policies were also frequently mentioned.

Shaokai Fan noted that political risk "is indeed a key issue of focus for central banks at present."