Gold price may see long-term rebound despite war setbacks, banks say

Gold is likely to rebound in the long-term even as the Middle East war upended the market, according to banks including ANZ Banking Group Ltd. and Goldman Sachs Group Inc.

Resilient demand from central banks, continued geopolitical uncertainty, expectations for Federal Reserve rate cuts and a diversification away from dollar-denominated assets are all reasons for long term optimism, according to analysts across institutions.

Gold has fallen nearly 10%, from a January record of more than $5,500 an ounce, since the Middle East war began in February. Rising Treasury yields and a stronger dollar, alongside volatility tied to the conflict, prompted some investors to raise cash.

But analysts expect prices to eventually recover, “as the macroeconomic mix of growth and inflation deteriorate, paving the way for central banks to resume rate cuts,” ANZ analysts Soni Kumari and Daniel Hynes wrote in a note Friday. ANZ maintained its outlook, forecasting bullion to hit $5,800 an ounce by year-end.

Central bank purchases are also expected to remain a key pillar of support, with official buying seen at around 850 tons in 2026, ANZ analysts wrote. ANZ’s bullish stance follows similar calls by Goldman Sachs and RBC Capital Markets Corporation earlier in March. Goldman retained its forecast of $5,400 an ounce, citing continued central bank purchases and expectations for 50 basis points of rate cuts by Federal Reserve this year.

Bullion still faces “tactical downside risks” in the short term if disruptions in the Strait of Hormuz persist, Goldman Sachs analysts Lina Thomas and Daan Struyven wrote in the note on March 31. However, the bank said a prolonged conflict could accelerate diversification away from traditional Western assets, supporting prices in the long-term.

Spot gold was trading near $4747.94 an ounce at 11:04 a.m. London time.

(By Preeti Soni)