Gold has recently entered a correction phase as investor anxiety surrounding tensions with China, the independence of the Federal Reserve, and the artificial intelligence sector has diminished. Following a peak of over $4,300 just last week, both spot gold and gold futures have swiftly dipped below $4,000. Despite this retreat, the yellow metal has still appreciated by more than 40% in 2025.
Maximilian Layton, the global head of commodities research at Citi, predicts that gold will likely continue its downward trajectory in the near term, suggesting that the next target could be around $3,800—indicating a drop of over 4% from current prices. He anticipates material support near $3,600, which would represent a more significant decline of 9%. Layton attributes the potential decline to a shift in U.S. presidential dealings with various countries, including China, as well as improvements in market sentiment, including an apparent resolution to the U.S. government shutdown.
Investor sentiment has improved recently, with concerns about U.S.-China relations easing and the Federal Reserve’s independence stabilized, particularly after the Supreme Court allowed Fed Governor Lisa Cook to retain her position. Furthermore, fears of an AI bubble have subsided, as investors are adjusting to the tech sector’s higher valuations. While the stock market showed positive movement ahead of key earnings reports from major companies, there remains an expectation on Wall Street that the underlying concerns that drove demand for gold will persist despite the current correction.
In a similar note, Deutsche Bank’s Michael Hsueh indicates that he anticipates the gold correction to bottom out between $3,700 and $3,800, suggesting that the current drawdown may be nearing its end. Bank of America’s commodity strategist, Michael Widmer, has also made a bullish prediction for the metal, suggesting it could climb to $5,000 per ounce by 2026—representing a more than 25% increase from current levels. Likewise, Janney Montgomery Scott’s Dan Watrobski expects long-term targets to be in the $4,500 to $5,000 range.
Overall, the case for gold as a strategic investment—particularly as a hedge against geopolitical tensions and economic uncertainties—remains robust. Investors are considering the right entry point as they analyze market trends in light of ongoing global events.