Gold prices have experienced significant downward pressure recently, driven by rising global yields, higher real rates, and renewed inflation concerns, which have reduced expectations for near-term Federal Reserve rate cuts [1]. According to OCBC strategists Sim Moh Siong and Christopher Wong, investors have continued to pare back gold-backed ETF holdings, further contributing to the downside, while stress-driven liquidation has also played a role [1]. MUFG’s Senior Currency Analyst Lee Hardman notes that gold and other precious metals are under pressure despite heightened geopolitical risks, with gold losing nearly a quarter of its value since the Middle East conflict began [2]. The metal is now approaching its 200-day moving average support near USD 4,090/ounce [2].
Both sources highlight that position liquidation and hawkish central bank repricing are key drivers of the ongoing correction in precious metals [1][2]. OCBC strategists emphasize that the market is trading less on geopolitical hedging flows and more on fears that persistent inflation could prompt a more hawkish stance from central banks, with rising energy prices and fading Fed cut expectations strengthening real yields and the US dollar, thereby pressuring gold [1]. MUFG reports that gold has failed to benefit so far from heightened geopolitical risks and stagflation fears, underscoring the dominance of macroeconomic factors over traditional safe-haven flows [2].
Despite the near-term challenges, OCBC maintains a constructive medium-term outlook for gold, expecting the metal to resume its uptrend, although prices may struggle for sustained momentum in the near term and trading is likely to remain choppy [1]. No specific forward-looking statements or analyst opinions are provided by MUFG regarding the medium-term outlook, but the technical support level at USD 4,090/ounce is highlighted as a key area to watch [2].
CONCLUSION
Gold is facing a sharp correction due to rising yields, liquidation, and hawkish central bank repricing, with prices nearing a critical technical support level. While near-term trading is expected to remain volatile, OCBC strategists maintain a constructive medium-term outlook, anticipating a resumption of the uptrend. The market impact is high, as macroeconomic factors continue to outweigh geopolitical risks.