Gold is navigating a challenging environment as tight global energy markets and quickly shifting central bank expectations alter investor sentiment. Despite ongoing geopolitical friction between the US and Iran – conditions that traditionally bolster safe-haven assets – surging Oil prices and a hawkish shift in most central banks have caused the precious metal to lag behind other commodities. As a result, some financial institutions are adopting a more guarded stance on the asset's immediate direction.

Tight energy markets create persistent headwinds for precious metals

Analysts at TD Securities point out that because a definitive deal between the US and Iran remains elusive, supply risks are keeping energy and base metals heavily supported at the expense of Gold. They note that institutional momentum from commodity trading advisors (CTAs) has largely flattened out, meaning the precious metal lacks the aggressive buying catalysts required to spark a significant breakout.

This suggests the macro headwinds that have weighed on the precious metals complex will remain in place.

Rising bond yields and hawkish central banks cap near-term upside

Taking a more cautious view on immediate price action, strategists at OCBC have dialed back their targets for the precious metal. They emphasize that the combination of a stronger US Dollar, rising treasury yields, and potential softness in physical demand from major consumers like India has temporarily dulled Gold's classic safe-haven appeal, even though long-term structural demand remains healthy.

We revised gold forecasts lower to reflect elevated oil prices for longer, hawkish Fed repricing and potential softness in India demand.

Banks anticipate a downward-biased consolidation phase for Gold

These banks collectively project a softening trend for Gold's in the short term. TD Securities highlights a flat, range-bound scenario where algorithmic traders are unlikely to shift positions unless the market forces a massive break past key technical triggers. Meanwhile, OCBC explicitly expects downward pressure and lower price paths due to a hostile near-term backdrop of high yields and a hawkish Federal Reserve. Both banks agree that while Gold's structural anchors remain intact for the long haul, its immediate momentum is firmly capped.

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)