During Friday's Asian trading session, the international spot price of gold continued to trade weakly, hovering around the $4000 per ounce level.
While many investors believe that after the recent rapid decline, the psychological $4000 level may attract some bargain-hunting buying, institutional views remain cautious, with significant divergence in the market regarding gold's medium to long-term trajectory.
Capital Economics economist Hamad Hussein stated that current market expectations for a gold rebound may be overly optimistic.
Looking at the next year-and-a-half timeframe, gold prices still face further downward pressure, primarily because the US monetary policy environment is expected to remain relatively tight, with the possibility of real interest rates continuing to rise.
The institution believes that, against a backdrop of US inflation still above the policy target and the Federal Reserve slowing its pace of rate cuts or even potentially raising rates again, real yields will remain relatively elevated.
Since gold itself does not generate fixed income, when real yields rise, the opportunity cost of holding gold increases, and capital tends to flow towards higher-yielding US dollar assets, which will continue to erode gold's investment appeal.
Furthermore, Capital Economics also pointed out that if global stock markets experience a significant correction in the future, gold may not immediately demonstrate its traditional advantage as a safe-haven asset.
During sudden equity sell-offs, some institutional investors, facing increased margin requirements, might be forced to sell liquid assets, including gold, to meet funding needs.
Such liquidity pressures could cause gold to fall in sync with risk assets, potentially amplifying the price correction.
Based on this analysis, Capital Economics forecasts that the international gold price could fall to around $3500 per ounce by the end of 2026, and potentially decline further to near $3250 per ounce by the end of 2027.
This projection implies that the institution believes gold will face a prolonged period of valuation adjustment.
However, market participants generally agree that gold's subsequent path will be influenced by multiple factors, including the Federal Reserve's policy trajectory, US economic growth performance, global inflation trends, and geopolitical developments.
If the US economy slows noticeably, real yields decline, or global safe-haven demand continues to intensify in the future, gold could still receive periodic support, so investors must dynamically assess market direction based on evolving fundamentals.
From a daily chart perspective, spot gold overall maintains a weak and volatile pattern, trading below its short-term moving averages, with the bearish trend showing no clear reversal yet.
The key $4000 level serves as crucial current support; a decisive break below could see prices test the $3960 and $3920 zones.
Resistance levels to watch above are at $4050, $4100, and $4150; until a firm recovery above $4100 is achieved, any rebound should be viewed as a technical correction, with the overall trend remaining bearish.
On the 4-hour chart, gold maintains a weak consolidation pattern, with short-term moving averages continuing their downward trajectory, and the MACD indicator remains below the zero line, though the green momentum bars have narrowed slightly, indicating some weakening in bearish momentum.
If the price can hold above $4000 and break through the $4050 resistance level, a short-term technical rebound is possible.
If it falls below $4000, it could open further downside, testing support near $3960 or even $3920.
Key Takeaways
Capital Economics maintains a relatively cautious stance on gold's future path, believing that a high real yield environment will continue to diminish its allocation value and expecting further downside over the next 18 months.
In the short term, the $4000 level remains a key battleground for bulls and bears.
Federal Reserve monetary policy, changes in real yields, and global risk sentiment will remain critical factors determining gold's medium to long-term direction.
Until a clear trend improvement emerges, gold is likely to continue trading in a weak and volatile manner.
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