The Middle East conflict cannot shake the faith in gold! Buying on dips signals the return of the gold bull market's "king's comeback" rally.

Zhitong Finance APP learned that as bargain-buying support has formed major backing for the gold price’s upward trend in recent days, and as the market awaits further clarity on how long the Middle East geopolitical conflict between regional actors will last, the price of gold has achieved two consecutive trading days of gains.

In the view of some veteran Wall Street analysts who are long bullish on gold, the current gold price curve looks more like a “repair-style bullish path in which the long-term bull-market logic has not broken down and, after a deep pullback in the short term, the bulls have regained control over pricing,” and they also emphasize that after the end of the geopolitical conflict, currency devaluation, long-term inflation risks, and increasingly upgraded pressure from fiscal deficits all still remain long-term structural tailwinds for gold.

During Monday’s trading session, spot gold rose 1.9%. The intraday gain even briefly approached 4%. It ultimately closed with the price back above $4,500 per ounce after nearly a week. It then gave back some of the gains as market sentiment toward a diplomatic resolution to the Iran issue warmed. Even though oil prices have kept climbing since late February, when the U.S./Israel joint attack on Iran sparked a new round of Middle East geopolitical conflict, both spot and futures gold prices have still shown resilience.

As inflation and stagflation-related worries put pressure on the prices of virtually all risk assets—including stock assets and high-yield bonds—some large institutional investors have started buying classic safe-haven assets on dips while gold prices are pulling back.

In addition, after U.S. Federal Reserve Chair Jerome Powell said on Monday local time that consumers’ long-term inflation expectations still appear to be under control, traders have once again bet that the Fed will restart its rate-cutting process for the remainder of this year, which can be said to have significantly alleviated the market’s strong concerns that a rise in oil prices could lead to global central banks keeping monetary policy tighter for longer. Longer periods of benchmark interest rates staying elevated undoubtedly pose a major long-term headwind for non-yielding precious metals such as gold. However, the Fed’s dovish signals and the market’s return to rate-cut expectations are a major positive for gold.

Bargain buying enters the market, pulling gold back from the edge of a bear market

U.S. President Donald Trump again threatened on Monday that if the Strait of Hormuz cannot quickly restore navigation, the U.S. will destroy in full Iran’s energy and infrastructure-related important assets. As more U.S. troops arrive in the Middle East, worries in the market about a full-scale escalation of the Middle East war are increasing. Iran-backed Houthi forces became involved in this geopolitical conflict over the weekend, marking a further upgrade of the war situation.

Just as Pakistan, Egypt, Saudi Arabia, and Turkey held active meetings and sought diplomatic ways to end the war, with market safe-haven sentiment easing, Israel’s latest missile strike caused parts of Tehran’s first important areas to lose power for the first time. Iran then attacked aluminum smelters in Bahrain and the United Arab Emirates. Both sides’ personnel casualties and war-dynamics statements can conceal some truths, but these latest frontline developments won’t lie—clearly, the situation is not moving toward the optimistic negotiations and mutual consensus direction described by the Trump administration.

These latest developments have intensified market concerns that this geopolitical conflict may drag on for a long time, and may even force major central banks worldwide—including the Fed—to curb rising inflation and choose to maintain rates for the long term unchanged, or possibly even shift toward rate hikes. Along with liquidity squeezes across broader financial markets, since the Iran war broke out in late February, spot and futures gold prices have fallen by 15%.

Gold’s current price pullback trajectory pushed multiple technical indicators into “oversold” or an oversold-equivalent price range last week. Then, the gold price stabilized last week under strong support from institutional bargain buying, and it ended the prior three-week streak of weak, falling prices. As shown in the chart above, gold seems to have found major support around $4,500.

However, given that the global economic growth outlook, which was already limping, could see a sharp slowdown due to a new round of energy-driven inflation caused by the geopolitical conflict, rate-hike expectations may be significantly restrained. Some of the largest asset-management firms on Wall Street say global financial markets have underestimated the risk of global economic downside, which will ultimately push U.S. Treasury yields lower—significantly reducing the opportunity-cost of holding gold and making this precious metal more attractive for long-term investment.

“As institutional bargain-buying money flows into gold, history shows that when key participants like ETFs begin to show signs of panic-like selling, it often signals strong upside moves to follow. But right now, market confidence in gold may be only temporary.” said Tatiana Darie, a senior macro strategist at Bloomberg Strategists Markets Live.

Gold prices, in a sense, are being pulled back from the “edge of a technical bear market” by a massive wave of bargain buying. The most direct evidence is that spot gold dipped to a four-month low of $4,097.99 in late March, falling below the 200-day moving average. Then, on March 27, it rebounded more than 3% in a single day, and by March 30 it returned to the important support level above $4,500.

The decline from the January closing peak at one point reached the significant 20% bear-market threshold. Outflows from the world’s largest gold ETF are on track to mark the biggest single-month outflow since 2022. However, bargain buying started to enter strongly last week, especially pushing spot gold to rebound 3% on Friday in a single day. This highlights that the selloff triggered earlier by a surge in oil prices, trend repricing from inflation, and liquidity squeezes has started to meet clear follow-through buying. In the eyes of some gold-bull forces, the drop since February looks more like a phase of pricing distortion where “high-interest-rate panic overwhelms the safe-haven attribute.” Now the market is once again pricing the safe-haven and recession-hedging attributes under the backdrop of war and the fiscal-deficit dilemma in developed markets.

As for the long-term bullish logic for gold, it remains very strong! Will gold, trading above $4,500, be setting the stage for a new bull market?

Wall Street financial giants such as Fidelity, Citigroup, and JPMorgan have recently thrown their weight behind the view that the long-term bull-market logic for gold has not changed—inflation risks, pressure from global fiscal deficits, and credibility problems related to global bond markets remain long-term tailwinds for gold. This round of decline may be a rare strategic dip-buying opportunity.

Multiple veteran market analysts insist that the structural fundamentals logic supporting gold has not experienced any meaningful breakdown or change. George Efstathopoulos, a fund manager at Fidelity International, said, this pullback is a major opportunity to buy on dips. “Inflation risks, fiscal pressure, and credibility problems in bonds from developed markets such as the U.S. and Japan are all still long-term structural tailwinds for gold.” The veteran fund manager said.

Max Layton, global head of research on commodities at Citigroup, said in a recent interview that once speculative positions are cleared out, the firm will “be actively bullish on gold,” and it is confident that the gold price will be higher than current levels one year from now.

U.S. Bank strategist Michael Hartnett, who is known as the “most accurate strategist on Wall Street,” said in a research note released recently that policy panic in the Trump administration is likely. To avoid economic recession, based on this premise, he believes the best trading theme is a long position on the direction of a steepening yield curve and consumer stocks. Meanwhile, as a loss of presidential credibility is often accompanied by a dollar bear market, and as global developed-market fiscal expansion continues (especially with Europe’s larger-scale spending on defense and energy, and Japan’s massive level of debt pressure), the bullish trend in gold and international stock markets will return opportunistically.

The Iran war first pushed fears about oil prices, inflation, and “higher-for-longer benchmark interest rates” to the forefront of global trading desks, causing precious metals assets like gold to face liquidity selling pressure and interest-rate suppression first. But once the market starts repricing again—slower economic growth, falling bond yields, widening fiscal deficits, and the return of safe-haven allocation strategies—gold is effectively regaining support. In addition, gold’s weakness in this U.S.-Iran conflict resembles the early-stage performance in many historical geopolitical wars—meaning, “gold falls first and then rises during a geopolitical conflict.”

JPMorgan, a Wall Street financial giant, is arguably a super bull on gold. The firm recently kept unchanged its gold bull-market target of $6,300 at end-2026. Its core support logic is not simply betting on geopolitical factors like war, but rather a deeper global “reserve-currency paradigm shift”—including central banks continuing to accumulate gold, global financial institutions continuing to reduce holdings of U.S. Treasuries, the increasingly hard-to-resolve fiscal-deficit predicament in developed markets such as the U.S. and Japan, as well as a broader trend of asset reallocation by global investors.

In mid-March, as the Iran war situation grew ever more murky, UBS still firmly reaffirmed its range view of $5,900 to $6,200. It emphasized that what gold truly hedges is the risk of currency devaluation driven by further spillover of geopolitical conflict, the return of safe-haven logic, falling global economic growth, and global asset reallocation needs, as well as global central banks reducing dollar allocations and retail investors’ diversified demand for quality—not a simple linear logic of “the fiercer the fighting, the higher the gold price.”