Gold has entered a technical bear market, but Wall Street remains optimistic: the long-term logic hasn't changed, and pullbacks are buying opportunities.

Gold has entered a technical bear market, but Wall Street remains optimistic: the long-term logic hasn't changed, and pullbacks are buying opportunities.

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The turmoil in the Middle East has shaken the global commodities market, yet gold has failed to act as a traditional safe haven. Instead, it has dropped in sync with risk assets. Nevertheless, several Wall Street analysts view this wave of selling as a short-term dislocation and maintain a bullish medium- to long-term outlook.

At the time of writing, spot gold was priced at $4,424.51/oz, down nearly 21% from the historical high of $5,594.82 set at the end of January, technically confirming entry into a bear market. The immediate causes for this round of decline are a stronger dollar and a temporary easing of geopolitical tensions—Trump announced a five-day delay in the planned strikes on Iran's energy infrastructure, prompting some investors to take profits.

Although gold prices are drifting away from Wall Street's previously envisaged bull market blueprint, many market analysts still see this 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 this decade, slightly downgraded his year-end price target to $5,000 (from $6,000 previously). Standard Chartered Bank expects that within three months after the end of this de-leveraging cycle, gold may rebound to $5,375. Bank of America Securities also predicts that the average price of gold will rise each quarter from Q2 to Q4 2026, within the $4,500–$5,750 range.

Gold Falls Together With Risk Assets, Behind the Scenes Push Emerges

Gold's decline in tandem with equities has shattered the market's expectations for its traditional safe-haven status, revealing deeper logic within positioning structure.

Citi's March 23 research report pointed out that, over the past 12 months, the momentum buying dominated by retail and ETF investors was the main driving force for gold's continued rise from $2,500/oz, whereas central bank gold purchases remained stable over the past two to three years.

The positioning structure dominated by retail and retail momentum funds causes gold to easily fall alongside risk assets during broad selloffs. Citi cites historical data noting that whether during the dot-com bubble burst, the 2008 financial crisis, or the pandemic shock, gold typically falls first and then rises in the early stages of sharp market corrections, usually bottoming before the stock market stabilizes.

Justin Lin, investment strategist at Global X ETFs, said the current selloff is "driven by short-term interest rate sensitivity, portfolio rebalancing triggered by stock declines, and a certain degree of market complacency over the Iran conflict", and categorized this drop as "an attractive buying opportunity for investors", maintaining a year-end baseline forecast of $6,000/oz.

Citi further notes that rising real interest rates and a stronger dollar have weighed on gold prices, while large numbers of retail and ETF holders passively reduced positions, making gold's "procyclical" linkage with other risk assets more extreme than the historical average.

Structural Factors Support Institutions’ Bullish Medium-term Outlook on Gold

The recent sharp decline in gold prices has not shaken institutional analysts' optimistic medium-term outlook, whose bull case is built on several structural factors.

Justin Lin, investment strategist at Global X ETFs, clearly stated his bullish stance "does not depend on war-related risk premiums, but is based on persistent geopolitical uncertainty, sustained central bank gold demand, and stable inflows from Asian gold ETF investors under a broader backdrop." He added that as gold prices correct, the likelihood of central banks stepping up gold purchases is "very high", which could provide a floor for the market.

Rajat Bhattacharya, senior investment strategist at Standard Chartered Bank, said the bank "remains constructively bullish on gold for the long term, supported by structural factors including strong EM central bank demand and investors' need for diversification in the face of geopolitical risks." He also emphasized that, as the dollar weakens, that should again support gold prices, and expectations for the Fed's eventual rate cuts are a key catalyst for a weaker dollar.

Citi pointed out that as the Iran conflict has significantly increased global geopolitical and economic risks—and lowered the likelihood of a "Goldilocks" US rate and growth environment—its medium-term outlook on gold has become even more optimistic. Its baseline scenario (50% probability) expects gold to rebound to $5,000/oz; if the conflict persists and triggers 1970s-style stagflation, then the bullish scenario (30% probability) expects gold to rise to $6,000 or even $7,000.

Gold’s Bottoming Is “Path-Dependent Not Price-Dependent”; Long-Term Support Factors Remain

Although the medium-term trend is relatively clear, Citi and other institutions clearly highlight that the timing for buying gold depends on the evolution of the geopolitical conflict path, and not a simple judgment based on a certain price level.

Citi’s Global Head of Commodity Research, Maximilian Layton, stated in a report that the “timing to buy gold is determined by the path, not the price level.” If the Iran conflict ends within the next 4–6 weeks, Citi recommends waiting until risk assets stabilize as a whole and the stock market bottoms before entering; if the conflict lasts longer, then a decline in real interest rates or a technical momentum reversal in gold prices will be more reliable buy signals.

From a longer-term perspective, Citi emphasizes that the “frictions” driving gold higher remain—sovereign debt risk, worries about the passive debasement of the dollar’s credit, continued reallocation of Chinese household savings into gold, and reserve diversification needs of EM central banks are lasting forces supporting prices. Bank of America Securities’ market forecasts show that gold’s year-end target price is $5,750/oz, and the projected average for Q1 2027 is around $5,200/oz; downside risk mainly comes if the conflict deescalates much faster than expected.

Overall, gold’s significant pullback has created a more attractive building opportunity for medium- to long-term investors, but until the conflict’s path is clearer and risk assets as a whole stabilize, most institutions recommend waiting and staying flexible.

Risk reminder and disclaimerMarkets involve risk, and investment should be prudent. This article does not constitute personal investment advice, nor does it take into account individual users' specific investment objectives, financial conditions, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article apply to their specific situation. Invest accordingly and at your own risk. ```