When “stagflation” meets the “tech bubble,” is gold’s opportunity still far away?

The core conclusion is that gold has already pulled back deeply from its intra-year highs and has entered a sideways consolidation phase; and in a phase where sentiment is low and the technical setup looks bad, it is often the window in which medium-term logic turnarounds are quietly incubated.
These two low-probability, high-impact tail variables—stagflation-like risks and tech-stock bubble risks—will ultimately converge on the same result: the re-weakening of USD credit, which could become the starting point for gold’s next round of opportunities.
In the near term, gold’s price action has basically stabilized and entered a range-bound consolidation. It must be objectively stated that the short-term technicals have not yet released clear bullish signals. But this mismatch of “fundamentals improving, signals unclear” is precisely the most typical feature of a left-side setup.
We are now in a period worth focusing on for gold. Going forward, keep a close watch on whether two low-probability, high-reward tail risks will materialize.
01 Tail risk one:
Dark clouds of a stagflation-like scenario are gathering
【Low probability - high impact】As the US-Iran conflict escalates again, oil prices have remained persistently on the high side since February this year. As of now, the year-to-date average price of Brent crude has increased by 26.2% year-on-year. If US-Iran contradictions remain difficult to resolve and oil prices do not fall back below $70 per barrel for long, inflation persistence could gradually become more evident. In addition, it is necessary to be alert to the compounding of potential risks—extreme weather has become noticeably more frequent this year, impacting major global agricultural production regions. Once energy prices and food prices rise at the same time, the risk of inflation expectations climbing sharply increases, and the probability of a stagflation-like situation (similar to 2021-2022) will also rise significantly.
But note a key premise: a stagflation-like scenario does not equal an immediate strengthening in gold by itself. In 2021-2022, inflation was high, but the Fed chose to suppress inflation at any cost, continuing to raise rates aggressively; real yields turned positive quickly and surged higher, putting pressure on gold instead.
Gold’s potential turning point is when the market begins to confirm that the credibility of “tightening policy” is weakening—when inflation is high but the Fed does not take action for a long time, or even if inflation has not yet met targets, the central bank may be forced to slow rate hikes—or even pivot—due to growth pressures. As of now, the rate-hike expectations priced in by the market are still evolving rapidly, which itself indicates that pricing has not stabilized yet.
The rigorous judgment is: part of the tightening expectations behind gold’s earlier decline has been released, but whether risks are fully cleared depends on whether the Fed’s tightening pace further exceeds expectations—this is a variable that needs continuous monitoring.
02 Tail risk two:
A tech-stock bubble—an unresolved sword hanging overhead
【Probability increasing - not yet at the critical point】The author does not believe that an AI bubble bursting will be realized in the near term—whether from the stage of industry development or from the liquidity environment, it has not yet reached the point where it is fully ready to be punctured. But there are signs that the risk’s marginal probability has risen, and it is worth including in the watch list ahead of time. Historical experience shows that when the US stock market undergoes gradual adjustment or enters a sideways phase, gold’s relative performance is usually stronger, reflecting the need for funds to reallocate as risk appetite cools. Based on historical experience, if a tech-stock bubble burst evolves into a liquidity-crisis-style sharp deleveraging (similar to 2008 and March 2020), gold may fall in tandem in the short term—under margin pressure, institutions are forced to sell off all liquidatable assets, including gold, to obtain dollar liquidity. The window for gold to truly strengthen usually appears in the later stage of panic trading, after the market confirms signals that central banks will intervene on a large scale.
03 Shared destination:
Repricing of USD credit
From a medium-term perspective, both risks point to the same result—USD re-weakening. The current USD index can still hold relatively high levels. On one hand, it benefits from the US’s ongoing leadership in AI technology, which continuously attracts global capital inflows and offsets market concerns about US Treasury credit and fiscal sustainability. On the other hand, it also benefits from the Fed’s skilled expectations management—an hawkish chairman combined with hawkish statements continues to send tightening signals to the market.
A special reminder: this inference of “USD weakening” is more of a medium-term judgment rather than a short-term certainty. If the Fed continues to deliver on—or even intensify—hawkish statements in the near term, the USD could still strengthen further in the short run, which may occur alongside gold facing near-term pressure.
What truly supports the medium-term logic is the question of how much room the Fed has left to keep raising rates meaningfully and aggressively, given political factors’ real constraints and the drag from potential downside risks in the US stock market. Once the gap between the “hawkish narrative” and “actual actions” is repriced by the market, the USD may weaken again in phases—and that is precisely the catalyst for gold’s next round of opportunities. $XAUUSD