Wait before buying the dip? TD Securities: Gold may fall below $3,900 this year and challenge $5,300 next year.

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Gold bulls may need to face renewed pressure. TD Securities’ latest research warns that the price of gold could fall below the $3,900 mark before bottoming out, but this pullback will present a strategic buying opportunity—the institution also maintains its long-term bullish target for gold to reach $5,300 by 2027.

Bart Melek, Head of Commodity Research at TD Securities, pointed out in the latest report that the current bear-market correction has not yet bottomed, with the biggest near-term threat coming from inflation pressure caused by continued oil price increases. He warned that Brent crude could still enter the $90-$110 per barrel range, which will reinforce the Federal Reserve’s restrictive policy stance and increase the cost of holding gold. As of press time, spot gold is quoted at $4,026.30 per ounce, down 1.6% on the day, just barely holding the $4,000 support level.

From a market perspective, pressure from oil prices and a strengthening dollar form a double drag. Melek emphasized that persistently high energy prices will force the Fed to maintain restrictive monetary policy, further suppressing gold performance: "Gold prices face further downside risk in the coming months."

Despite the short-term pressure, Melek made it clear that the current bull market is far from over, and he expects gold prices to break $5,300 and set a new record high in 2027. He advises investors to treat the recent price pullback as a strategic window for positioning.

Oil Prices: The Biggest Near-Term Threat

The continued turmoil in the Middle East is the core backdrop to Melek's warning. He pointed out that interruptions in the Strait of Hormuz have caused global oil inventories to drop to historic lows—even if a ceasefire is eventually reached and tankers are allowed free passage, it will still take several months to rebuild inventories.

"Inventories continue to be consumed to unsustainable low levels, at least until October. This means that crude oil prices could temporarily reach $100 per barrel, higher than the current $74 level," Melek wrote in his report. He also warned that some regions globally may begin to price in fuel shortage risks, and even if supply resumes fully today, this restrictive effect will not dissipate quickly.

Currently, Brent crude is trading above $73 per barrel, with a daily gain of over 1%, reflecting the market’s continued concerns about supply prospects.

Federal Reserve Policy Constraints, Gold Under Pressure

In Melek’s analytical framework, the deeper impact of high oil prices lies in their influence over the Fed’s policy trajectory. Elevated inflation expectations will make it difficult for the Fed to shift toward easing, while a persistently restrictive monetary environment will increase the opportunity cost of holding gold.

Melek specifically pointed out that, despite stubborn inflation pressures, he believes there are no hawkish figures within the current Fed board resembling Paul Volcker; they will not employ “whatever it takes” aggressive measures to suppress inflation. This judgment is one of his key reasons for being long-term bullish on gold.

He expects that by May 2026, the composition of the Federal Open Market Committee (FOMC) may become more dovish, and the 2% inflation target will be viewed as a reference rather than a rigid constraint.

The Logic Behind the $5,300 Target for 2027

Despite short-term pressure, TD Securities remains optimistic on gold’s long-term prospects and offers a complete set of upward logic.

Melek believes that as economic and capital flow obstacles caused by the Iran situation gradually dissipate, upward catalysts for gold will materialize in sequence: falling inflation expectations, the Fed shifting focus toward maximum employment, and liquidity injection measures to offset economic losses from energy shocks will all provide support.

On the macro front, he emphasized that the size of US Treasuries may approach $40 trillion, and persistently high fiscal deficits will reignite concerns in the market about “financial repression” and currency depreciation. He also mentioned that some investors and central banks may worry that the Fed will pursue quantitative easing in disguise under the name of “liquidity tools” to suppress long-term yields; at that point, the inflation compensation capability of US Treasuries may be questioned, and gold, with its long-term inflation-tracking ability, could become a more attractive safe-haven asset than Treasuries.

Risk Warning and DisclaimerThe market carries risk, and investment should be carried out with caution. This article does not constitute individual investment advice, nor does it take into account any user’s specific investment objectives, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their particular circumstances. Investing based on this is at your own risk. ```