7 Charts to Understand Whether Gold Has Corrected Enough

**1 **, Why the Gold Safe-Haven Halo Has Dimmed

Since the outbreak of the U.S.-Iran war, the performance of gold prices has been****“full of surprises”****, and market doubts about gold’s current safe-haven role have been growing by the day. As shown in Figure 1, after the U.S.-Iran conflict erupted, crude oil and the U.S. dollar have surged continuously, yet the safe-haven halo of XAU/USD has dimmed. So when can gold be bought on dips? Can gold and silver resume a safe-haven-style uptrend? Or has the pricing paradigm shifted?

Through the lens of the surface phenomenon to see the underlying essence, in this geo-turbulence, gold’s**“safe-haven attribute”**** has failed, and the core reasons are as follows:2 key aspects:**

First, the U.S.-Iran conflict gradually sinks into stalemate. From the underlying logic, the safe-haven rise in crude oil stems from a supply shock caused by the closure of the Strait of Hormuz, while gold’s safe-haven attribute comes from the intensity and scope of the geo-conflict. Compared with gold and crude oil, it’s not hard to see that after March 2, gold has shown a downward trend. After Iran temporarily steadies its unfavorable position, the conflict’s scope still remains mainly limited to between the U.S., Israel, and Iran, so in the short term gold prices lack the momentum for further gains.

Second, the seesaw effect between crude oil and gold. The transmission path of the crude oil–gold seesaw effect: supply shock → oil price rises → rising concerns by the Federal Reserve about inflation → weakening expectations for Federal Reserve rate cuts → declines in precious metal prices. Based on forecast market data, the probability that the Federal Reserve will hold rates steady in June 2026 rises from 42% to 85%. The March FOMC meeting has already begun discussing rate hikes, making the crude oil–gold seesaw effect increasingly prominent.

2**, Why We Believe the Downside Room for Gold Is Relatively Limited**

We believe the downside room for gold continues to be relatively limited. The core reasons include****“the trading side”**** and****“the policy side2**** dimensions:**

Trading side: When gold3-month IV surges to30% or above, the maximum pullback for gold over the short term is about20%-25%. From February 27, 2026 to March 23, 2026, gold’s 3-month maximum IV is 31%, which falls within the scenario shown by the red circle in Figure 4. As of March 23, the maximum drawdown has already reached 24.4% (calculated based on the prior peak of 5420 U.S. dollars per ounce). We believe the room for further declines in gold may be relatively limited.

Policy side: In the20%-25%-around maximum drawdown scenario for London gold, it is always accompanied by a marginal tightening in expectations for monetary policy by the Federal Reserve. From February 27, 2026 to March 23, 2026, due to the crude oil–gold seesaw effect, London gold’s maximum drawdown has already reached 24.4%. We believe that for gold to break below 4000 U.S. dollars per ounce this round, rate-hike expectations need to continue strengthening throughout the year. But currently, the market has already priced in that the Federal Reserve will not cut rates within the year, and even part of the expectations for rate hikes within the year.

3**, Why the Foundation for a Short-Term Rebound in Gold Is Not Solid**

We believe the foundation for a short-term rebound in gold is not solid. The key arguments include the following3 aspects:**

First, the crude oil supply shock has become the biggest**“gray rhino”**** on the current scene.** For example, on March 16–20, 2026: after Israel attacked Iran’s natural gas facilities, Iran included Saudi Arabia, Qatar, and the UAE’s domestic oil and gas facilities in “lawful strike targets,” causing Brent crude to once again approach the 120 U.S. dollars per barrel mark. Spot London gold fell rapidly from above 5000 U.S. dollars per ounce to around 4500 U.S. dollars per ounce.

Second, the U.S. oil**“supply assurance and price stabilization”**** measures do little to ease the current tight supply situation.** For example, on March 19–20, 2026: on the evening of March 19, U.S. Treasury Secretary Besent planned to curb the skyrocketing oil prices by lifting some Iranian oil sanctions. At present, about 140 million barrels of sanctioned Iranian oil lie on the surface of the waters in the Persian Gulf. Fundamentally, this is “expectation management” and “emotional soothing.” Releasing 140 million barrels of oil is only enough for global consumption for 1–2 days.

Third, the cost for Iran to blockade the strait is relatively low, and it is difficult for the Strait of Hormuz to quickly restore to the wartime period’s pre-war flow levels. Combined with the transmission mechanism described above—“supply shock → oil price rises → Federal Reserve concerns about inflation increase → Federal Reserve rate-cut expectations weaken → precious metal prices fall”—market forecasts suggest that the probability of the Strait of Hormuz returning to normal before the end of April 2026 is below 30%. Iran only needs to block the strait using low-cost methods such as drones and sea mines. This could pose challenges to the persistence of inflation and to the sustainability of a rebound in precious metals.

In summary, we recommend that in the short term, you should seize the rhythm of**“slow gains and fast drops”, and adopt the thinking of“trading space for time”. After the short-term“fast drop”****, grasp the opportunities to buy on dips, continuously reduce the cost of holding gold long-term, and pursue long-term returns.**

Risk notice: Major changes in U.S. economic and trade policies; tariff spillovers beyond expectations, leading to the global economy slowing by more than expected and market adjustments becoming larger; frequent geopolitical factors leading to increased global asset volatility; oil prices rising beyond expectations and the U.S. facing stagflation risk; exchanges modifying futures delivery rules.

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