Key Takeaways
- Gold futures declined 0.2% to $4,400.50 per ounce on Tuesday amid a rising U.S. dollar.
- Spot gold experienced a 2% intraday drop and has fallen approximately 21% from its late-January high of $5,594.82.
- Market uncertainty increased following Saudi Arabia’s agreement to allow U.S. military access to King Fahd air base.
- Strategists at Global X ETFs and Standard Chartered maintain year-end targets of $5,375–$6,000 per ounce despite current weakness.
- Yardeni Research’s Ed Yardeni continues to project $10,000 per ounce by decade’s end.
The precious metal has officially crossed into bear market territory with a decline exceeding 20% from January’s peak. However, prominent market strategists believe the downturn could be temporary.
Spot gold experienced an intraday decline of as much as 2% on Tuesday before recovering slightly to settle at $4,335.97 per ounce. Futures contracts dropped approximately 2% to $4,317.80. The metal has surrendered roughly 21% from its late-January record of $5,594.82.
Continuous gold futures slipped 0.2% to reach $4,400.50 per ounce. The U.S. Dollar Index climbed 0.4%, creating additional headwinds for the precious metal. Gold’s dollar denomination means currency strength reduces purchasing power for international buyers.
Gold has shed 17% of its value throughout March, based on FactSet data. The dollar index has appreciated by approximately 3% following the outbreak of tensions with Iran on February 28.
Tuesday’s weakness followed a Wall Street Journal report revealing Saudi Arabia’s consent to provide U.S. forces access to King Fahd air base. This development represented a departure from the kingdom’s previous stance against facility usage during the Iranian conflict.
Neil Welsh, head of metals at Britannia Global Markets, noted that markets continue showing high sensitivity to geopolitical shifts. Without a clear resolution pathway, he anticipates ongoing price swings in the gold market.
Additional selling pressure emerged after President Donald Trump announced on Monday a five-day suspension of planned strikes targeting Iran’s energy infrastructure. This development reduced some geopolitical risk premium that had been supporting valuations.
Long-Term Optimism Persists Among Strategists
The substantial price decline has failed to shake confidence among numerous market analysts. They highlight central bank accumulation, geopolitical instability, and dollar weakness prospects as factors supporting higher prices ahead.
Ed Yardeni, president of Yardeni Research, adjusted his year-end projection to $5,000 per ounce from $6,000. However, he confirmed to CNBC his unchanged long-term expectation of $10,000 per ounce by 2030.
Justin Lin, investment strategist at Global X ETFs, established his year-end estimate at $6,000, characterizing the current decline as “a compelling entry point for investors.” He attributed the selloff to transient factors including elevated interest rates and portfolio adjustments.
Lin emphasized his constructive view extends beyond the Iran situation. He identified central bank purchasing activity and capital flows from Asian gold exchange-traded fund investors as primary catalysts.
Standard Chartered maintains an optimistic stance on the precious metal. Senior Investment Strategist Rajat Bhattacharya stated the bank anticipates a rebound toward $5,375 within the next three months following the current selling wave. He pointed to technical support near the $4,100 threshold.
Central Bank Demand Provides Foundation
Emerging market monetary authorities have sustained their gold accumulation efforts while reducing dollar exposure. Lin suggested a “high likelihood” exists that central banks accelerate purchases following the recent price weakness.
Bhattacharya noted that dollar depreciation would provide renewed support for gold valuations. Market participants anticipate Federal Reserve rate reductions ahead, potentially weakening the currency.
Standard Chartered identifies technical price support for gold around the $4,100 level.
