Gold (GC=F) fell more than 2% on Tuesday, but the recent volatility may be temporary as Wall Street analysts see a bullish outlook for the precious metal in 2026.
Asian markets were closed for the Lunar New Year, with gold futures hovering around $4,900. Meanwhile, Iran and the United States reached an “overall agreement” on a possible nuclear deal, easing tensions in the Middle East.
“Despite short-term weakness, the structural drivers supporting gold remain firmly in place,” Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a newsletter.
The strategist highlighted central bank buying, geopolitical fragmentation and portfolio diversification as key factors driving gold’s safe-haven appeal amid worries about currency depreciation.
“Together, these forces suggest that while corrections are inevitable following parabolic gains, the broader bull trend remains intact,” Hansen wrote.
Goldman Sachs analysts reiterated that there are significant upside risks to their forecast for a gold price of $5,400 per troy ounce by the end of 2026.
“We believe there are upside risks to Private Sector Diversified’s $26 forecast of $5,400,” analyst Lina Thomas and her team said in a note earlier this month.
“We estimate that a 1 basis point increase in the share of gold in U.S. financial portfolios is associated with a 1.5% price increase, driven by incremental buying,” she added.
Investors also expect the Federal Reserve to cut interest rates this year, with Polymarket giving the odds of two to three cuts.
Read more: How Fed rate decisions affect your bank accounts, loans, credit cards and investments
Lower interest rates could put downward pressure on the U.S. dollar, pushing up dollar-denominated commodity prices.
“Falling U.S. real interest rates, ongoing geopolitical concerns and policy uncertainty should continue to drive gold demand,” UBS analysts said in a note earlier this month.
In a Bank of America fund manager survey released on Tuesday, 50% of respondents said “long gold” was the most crowded trade in February for the second month in a row.
The precious metal has been volatile since its rally stalled in late January, with futures falling sharply from a high of $5,600. The recent sell-off in commodity markets has also caused silver to plummet from January’s all-time highs.
Silver (SI=F) is down 4% year to date, while gold is up 12%.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X: @ines_ferre.
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