Analysts: Structural Tailwinds for Gold Remain Despite Price Plunge, Bargain Hunters Emerge

On March 28, according to Bloomberg, after experiencing its largest sell-off in years, bargain hunters have begun to enter the gold market. As of Thursday’s close, gold prices had fallen 19% from their January closing peak, nearing the 20% threshold traditionally marking the start of a bear market. However, by Friday, buyers re-entered the market, pushing gold prices up by approximately 3%.

George Efstathopoulos, a fund manager at Fidelity International, stated that this pullback presents a buying opportunity once Middle East tensions subside. Inflation risks, fiscal pressures, and concerns about bond credibility remain structural tailwinds for gold. Analysts also pointed out that a war involving Iran could trigger central banks to sell gold, or at least slow their pace of purchases. Daniel Ghali, a commodity strategist at TD Securities, believes that given central banks have been the cornerstone buyers in this bull market, a large-scale direct sell-off would have a more immediate impact on prices and a more destructive effect on market sentiment. However, for now, the broader trend is likely to be a gradual slowdown in the pace of central bank gold purchases, rather than a complete shift to selling.