Strategist: Gold lacks upward momentum in the short term, but its long-term value remains

Huitong Network, October 27—— At the beginning of the year, spot gold prices approached the high of $5,600/ounce, but in the second half of the year, market sentiment turned cautious due to the situation in the Middle East. Rob Haworth, Senior Investment Strategist for Bank of America Wealth Management, believes that as long as the conflict continues, central banks around the world will prioritize energy security, leading to a slowdown in gold purchases. Coupled with the Fed's gradual rate hikes, a strong US dollar, and weak physical demand in the two major Asian countries, gold lacks short-term upward momentum. Only when the conflict subsides, the energy market stabilizes, and central banks resume accumulation could gold see a sustained rebound.

At the start of this year, continuous gold buying by central banks drove spot gold prices close to $5,600 per ounce, making gold a mainstream investment theme. However, since the second half of 2026, with the Middle East situation remaining unresolved, the market’s attitude towards gold has clearly turned cautious. Rob Haworth, Senior Investment Strategist at Bank of America Wealth Management, analyzes the multiple suppressive factors currently faced by gold and the prerequisites for a future recovery.

Central Banks Shift Focus, Gold Loses Core Buying Support

Haworth points out that for gold to return above $5,000 per ounce, the end of the Iran conflict and the normalization of global energy markets are prerequisites, after which central banks would refocus on diversification in reserves. The long-term investment value of gold has not disappeared, but for now, central banks prioritize economic stability and energy security, and are no longer continuously increasing gold reserves.

He says, “As long as the conflict continues, the gold market will likely remain under pressure.” The previous central bank gold buying frenzy that pushed up gold prices has faded. Affected by high energy and food prices, countries are diverting funds to cope with energy supply risks, forcing the pace of reserve diversification to be put on hold. As early as the end of March, he noted that increasing gold reserves was no longer a priority for many countries.

Traditional Bearish Factors Persist, Safe Haven Logic Mutates

Now, gold prices are once again dominated by traditional fundamentals such as real interest rates and the US dollar. Rising US Treasury yields, a strong dollar, and the search for liquidity continue to weaken gold’s traditional safe-haven appeal.

According to his view, the Fed’s gradual tightening cycle is very unfavorable to the zero-yield asset that is gold. Although the Fed is firmly committed to fighting inflation, it will not take aggressive rate hikes. Institutional economists expect one more rate hike in December, and possibly another in March next year. This moderate tightening path is enough to keep the dollar relatively strong and continue to suppress gold prices. Even when Treasury yields have fallen from their highs, there has not been a massive buying into gold, as funds prefer technology growth stocks and energy sectors benefiting from supply disturbances.

Physical Demand Fails to Pick Up, Asian Consumption Lags

The two major Asian countries are the world’s main physical gold consumption markets, but Haworth believes it’s difficult for physical demand in both markets to rebound significantly in the short term. The domestic economic environment is under pressure, and residents’ purchasing power is limited, making it hard to expand gold consumption. With slowed central bank gold buying, weak physical demand, and the Fed’s policy constraints, there are currently no catalysts for a significant rise in gold prices in the near term.

He mentions an anomaly: geopolitical turmoil would typically benefit gold, but this round of conflict has pushed up energy prices and intensified inflation, so funds are prioritized to deal with urgent economic risks and the traditional safe-haven influx into gold has not materialized. He says: “There is currently no bullish logic for gold, which is particularly notable in an environment full of conflict and uncertainty.”

Long-Term Value Remains, Awaiting Multiple Signals to Align

Although he holds a cautious short-term outlook, Haworth does not believe gold’s role as a strategic reserve asset has disappeared. The long-term need for countries to reduce reliance on a single currency and diversify reserves remains unchanged. Central bank gold accumulation still holds the key to the long-term upward trend of gold prices, as seen with major Asian countries consistently reducing dependence on the US dollar and euro.

However, trade patterns and economic outlooks are full of uncertainty, making it hard to predict when central banks will return to buying gold in earnest. For gold prices to embark on a strong upward trend, the Middle East situation must be resolved, global trade must stabilize, and clear signals of central bank gold buying need to return.

Conclusion

Gold is currently in a unique position, where geopolitical conflict has not resulted in safe-haven inflows, but instead led to inflation and high interest rates, which are negative for gold. The long-term reserve value of gold remains, but a turnaround in short-term market trends will require an easing of the energy crisis and a return of central bank funds into gold reserves.


Spot Gold Weekly Chart Source: Easy Forex

East 8th Zone, October 27, 10:56, Spot Gold quoted at $4009.32/ounce