The standoff between the U.S. and Iran has reached a deadlock. How will the gold price behave around the 4700 level?

Questioning AI · How do US-Iran negotiations’ progress influence gold price fluctuations?

“Jingwei Global” Production

China Securities Journal, May 9th (Dong Wenbo) - The week of delivery has ended, and gold prices have rebounded. This week, markets are increasingly worried about inflation and rising interest rates, while also hoping for US-Iran talks. Spot gold fell below $4,500 per ounce but quickly rebounded, reaching a high of $4,764.73 per ounce, with a weekly increase of 2.15%.

Spot gold price trend (weekly chart) Source: Wind

The Strait of Hormuz has been blocked for over 70 days, and every confrontation spreads to financial assets. Now, there are rumors that an agreement is close to being reached at the negotiation table. What’s next for gold?

Stalemate between the US and Iran, gold ETFs see a reversal

According to Iran’s Tasnim News Agency on May 8, Iran is drafting legislation related to the Strait of Hormuz. U.S. President Trump stated at the White House on the same day that the U.S. might resume the “Freedom of Navigation” operations aimed at guiding stranded ships through the Strait of Hormuz, and expected to receive Iran’s response to the US-Iran agreement proposal that evening.

Currently, the US and Iran maintain a delicate balance. As of the close on Friday Eastern Time, spot gold rose 0.61% to $4,713.56 per ounce; COMEX gold increased 0.27% to $4,723.70 per ounce. The futures-spot spread narrowed to around $10, easing short-term delivery pressure.

Notably, throughout April, spot gold prices retreated 1.02%, but global gold ETFs experienced a strong reversal.

The World Gold Council’s latest data shows that in April, global physical gold ETFs saw inflows of $6.6 billion, boosting total assets under management by 1% to $615 billion, reversing the net outflows seen in March. All regions experienced net inflows, with the market size recovering across the board. The Asian market’s gold ETFs have seen net inflows for eight consecutive months, with $1.8 billion added in April, indicating sustained enthusiasm.

On the same day, the People’s Bank of China announced that China’s gold reserves increased for the 18th consecutive month, with an addition of 260k ounces in April, continuing to expand for two months in a row.

Wang Qing, Chief Macro Analyst at Orient Securities, believes that, despite gold prices being at a historic high, from the perspective of optimizing international reserve structure, increasing gold holdings is becoming more necessary.

Li Chao, Chief Economist at Zheshang Securities, said, “For official reserves, increasing gold holdings helps reduce reliance on US dollar assets, enhancing the safety and resilience of reserve portfolios.”

According to statistics, as of the end of April 2026, in China’s official international reserves mainly composed of foreign exchange reserves and gold reserves, gold accounts for about 9.1%, below the global average of around 15%. “Based on various factors, the overall trend is that the People’s Bank of China will continue to increase gold holdings,” Wang Qing said.

Additionally, as a major buyer of gold in Europe, Poland’s National Bank increased gold holdings by about 12 tons in April, with total reserves reaching 595 tons. Poland’s central bank governor Adam Glapinski recently stated that the goal is to raise gold holdings to 700 tons.

Barbara Lambrecht, Commodity Analyst at Deutsche Bank, said on Friday, “Over the past four years, central bank gold purchases have been one of the most important drivers of demand.” She explained that, according to the World Gold Council, in the first quarter of this year, total gold purchases by central banks and public institutions approached 245 tons, a year-on-year increase of about 3%, even slightly above the five-year average.

Ray Dalio, founder of Bridgewater Associates, emphasized the irreplaceable role of gold. Recently, he publicly stated on the New York Times podcast that any investment portfolio should contain 5% to 15% gold. “Because during very bad economic times, gold often plays the biggest role. Historically, in all such periods, all fiat currencies depreciate, while gold appreciates.”

Currently, gold is the second-largest reserve currency among global central banks, after the US dollar, ahead of the euro and yen. Dalio believes that gold’s unique advantages—backed by central banks and free of credit risk—are increasingly valuable as the world enters a cycle of “currency devaluation and sovereign credit deterioration,” and de-dollarization demand will systematically push up gold prices.

Will the safe-haven attribute still fail?

Since the outbreak of Middle East conflicts, the safe-haven status of gold has been questioned more than once.

Li Chao believes that in the short term, if the US-Iran conflict continues to ease, traditional safe-haven demand may decline. However, falling oil prices will reduce inflationary pressures, weaken US bond yields and the dollar, and restore market expectations for continued easing by the Federal Reserve, which is more favorable for interest-free assets like gold.

According to Qu Rui, Senior Vice President of Research and Development at Orient Securities, although current gold prices have recovered past the $4,700 per ounce mark, the main factors supporting gold stability have not changed. This is merely a rebound driven by marginal easing of the US-Iran situation.

“On one hand, the Federal Reserve’s monetary policy expectations have not shifted, and real yields on the dollar remain high, so the opportunity cost of holding gold has not decreased significantly. On the other hand, the ‘conflict and negotiation’ game between the US and Iran has not changed, and the market’s sensitivity to geopolitical risks has temporarily dulled. The upward momentum from short-term emotional recovery is not sustainable and cannot serve as a long-term support for gold prices,” Qu Rui told China Securities Journal.

Lu Zhe, Chief Economist at Dongwu Securities, said that looking ahead to May, under the background of the US-Iran deadlock and data validation, gold prices are likely to “oscillate upward with a slow rise,” with resilience from central banks and safe-haven support potentially opening room for gains.

Some international institutions hold a more optimistic view.

In a recent report sent to China Securities Journal, Lina Thomas, Senior Commodity Analyst at Goldman Sachs, predicted that by the end of 2026, gold prices will reach $5,400 per ounce, citing ongoing diversification efforts by central banks worldwide, currently relatively low speculative positions, and the Federal Reserve’s expected implementation of a 50 basis point rate cut.

UBS Wealth Management’s CIO Office stated on May 6 that demand from institutions and retail investors remains strong, providing room for gold prices to rise. They continue to see gold as an effective diversification tool with hedging properties, expecting the price to reach around $5,900 per ounce by year-end.

A report from Bank of America in early May indicated that short-term gold prices might remain under pressure, but the long-term outlook remains optimistic. The bank maintains a 12-month target of $6,000 per ounce. The report notes that despite inflation concerns, US economic policy uncertainties—including high fiscal deficits and a weak dollar—will continue to support gold prices.

According to the Financial Times of the UK on April 1, Standard Chartered’s Global Head of Commodities Research, Suki Cooper, emphasized that gold’s safe-haven attribute has not failed; rather, its role has temporarily shifted. Once this phase passes, gold could again test historical highs.

“Gold in the market sometimes leads, sometimes plays a supporting role. But that doesn’t mean it has lost its traditional functions,” Suki Cooper said.

The over 70-day blockade is like an invisible sword hanging over the global economy, with gold repeatedly pulling and tugging in this suffocating environment, tormenting both bulls and bears. Whether the US-Iran negotiations reach a result or the Strait of Hormuz reopens, gold’s role as a geopolitical risk hedge has been repeatedly validated and reinforced. (China Securities Journal APP)

(The views expressed are for reference only and do not constitute investment advice. Investment involves risks; please proceed with caution.)

责任编辑：薛宇飞 李中元