Gold prices have stabilized above $4,600 per ounce, despite recent volatility driven by Middle East tensions. Since early April, gold has entered another phase of adjustment. On April 2, London spot gold approached $4,550 per ounce, and although it experienced a sharp decline at the opening on April 6, it managed to hold above the $4,600 level.
Earlier, on March 23, London gold had briefly fallen below $4,100 per ounce, marking a cumulative decline of up to 30%. With the rebound since late March, questions arise as to whether the correction has ended and if gold can resume its previous upward trajectory.
Industry experts suggest that while gold may experience short-term fluctuations, the long-term de-dollarization trend remains intact, providing continued support for gold prices. According to Li Zhongliang, Investment Manager at Cheese Fund, the absence of clear signs of de-escalation in the Middle East indicates that conflict may persist, leading the market to oscillate between expectations of easing tensions and ongoing risks, resulting in sharp price swings.
"Despite short-term volatility, the long-term outlook for gold remains positive," Li noted. "The current phase appears to be a temporary consolidation, building momentum for future gains. The core long-term driver is the de-dollarization trend, which underpins gold's price stability." Technically, he observed that after rebounding to the key level of $4,800 per ounce, gold retreated rapidly, indicating significant selling pressure. Combined with geopolitical uncertainties, short-term prices are likely to remain volatile until the situation becomes clearer. The overall trend in the second quarter is expected to be one of consolidation and bottom-building, with a focus on geopolitical risks.
From a long-term perspective, however, such volatility may present opportunities for phased investment. Wu Lixian, International Strategist at Everbright Securities, added that market volatility is likely to persist in the coming weeks, with gold prices closely tied to developments in the Middle East. If tensions escalate over the next two weeks, gold may continue to be affected. Additionally, given the substantial rebound from $4,100 to around $4,700 per ounce, investors may consider waiting for a pullback before increasing exposure.
Wu emphasized that the long-term upward trend for gold remains unchanged, with the underlying bullish logic intact. Zhou Junzhi, Chief Macro Analyst at China Securities Co., echoed this view, stating that gold's medium- to long-term fundamentals remain robust. Despite experiencing its largest weekly decline since 1983 in March, driven by concerns over potential prolonged blockades in the Strait of Hormuz and the Federal Reserve's hawkish stance, gold's safe-haven attributes have not been permanently diminished. A clearer interest rate path may restore its appeal.
Zhou concluded that gold's price movements remain within expected parameters. Once liquidity-driven pressures subside, medium- and long-term factors, such as the weakening U.S. dollar and the rising international role of the Chinese yuan, will reassert themselves, leading to a systemic repricing of gold.
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