Gold prices have fallen from $5,600 per ounce at the start of the year, recently dropping below $4,000 per ounce.
Despite the weak short-term performance, Morgan Stanley stated it will maintain gold as its top pick among metals and has set a target price of $5,000 per ounce for the second quarter of 2027.
Regarding the current decline in gold prices, Rob Haworth, Senior Investment Strategist at U.S. Bank Wealth Management, pointed out that the U.S.-Iran conflict must end for gold prices to return to $5,000 per ounce.
He analyzed that gold has traditionally been a safe-haven instrument, but the U.S.-Iran conflict has caused a major shift in global capital flows, with countries facing rising energy and food costs redirecting resources away from reserve diversification toward other uses.
He emphasized that gold's long-term investment appeal remains intact, but in the short term, central banks are prioritizing economic stability and energy security over accumulating more gold, keeping gold under continued negative pressure. Therefore, as long as the U.S.-Iran conflict persists, pressure on the gold market will remain.
Morgan Stanley also noted in its latest report that gold's role in investment portfolios needs to be repositioned. The report indicated that since 2020, gold has been unable to effectively hedge against stock market declines, and in extreme stock sell-offs, it can even amplify portfolio losses.
However, during sharp U.S. Treasury sell-offs, its buffer value has become increasingly prominent, making it a core tool against fiscal risks and sovereign credit risks.
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