It could be time to invest for gains in the beaten-up gold (GC=F) market.
“This makes for, we think, a reasonable entry point,” Barclays strategist Ajay Rajadhyaksha said in a note on Thursday.
The buy-the-dip trade reflects a few factors that investors may be forgetting, Rajadhyaksha argued.
“Central bank buying of gold, which picked up sharply after 2022, is unlikely to fade,” he said. “Fiscal profiles across the West keep worsening. The Fed has missed its 2% inflation target for four straight years, and we do not think a rate hike is on the horizon in 2026. The combination of geopolitical risk, persistent central bank buying, the inflation spike from the oil shock, and the fiscal effect of the conflict should all support gold, especially as a tail hedge in most portfolios.”
Being bullish on gold was one of the best trades of 2025, where the precious metal saw its strongest annual performance in 46 years. Prices surged 65% to finish the year at $4,300 per ounce.
After hitting an all-time record of $5,608 per ounce in early February and trading near $5,100 at the start of March, gold has tumbled about 15% over the past 30 days. Prices have currently stabilized around $4,521 as of March 26.
Read more: How much gold would $1 million buy at different points in history?
“It’s been acting anything but a safe haven trade,” Sevens Report Research founder Tom Essaye said on Yahoo Finance’s Opening Bid.
This counterintuitive drop — occurring exactly when geopolitical tensions from the Iran war should, in theory, drive a “flight to safety” — is the result of a few elements.
For one, the energy shock from the conflict with Iran has sent inflation expectations ripping higher. In response, the Federal Reserve has signaled that interest rate cuts are off the table for the foreseeable future, making nonyielding assets like gold less attractive compared to surging Treasury yields.
And then, as global equity markets have come under pressure, institutional investors have been forced to liquidate their most profitable “winning” positions — like gold — to cover margin calls and losses in their stock portfolios.
Essaye is on the other side of the trade on gold, adopting a more bearish posture. To him, the aforementioned headwinds to gold are likely to stay in place in the near term.
“No [interest in gold], not right now,” Essaye added.
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
