The hidden force driving gold's surprise reversal |
| |
|
This week’s insights include: |
- Why gold fell when it should have rallied: Despite the Iran conflict and Strait of Hormuz closure, gold has dropped from $5,400/oz to $4,600/oz as governments and investors liquidate reserves.
- Central banks are quietly reshaping the gold market: De-dollarization has driven central banks to add over 1,000 tons per year for three years running, with 95% expecting to keep buying.
- The supply side of the story most investors miss: Nearly 75% of the world's gold has already been mined, and at current extraction rates, economically recoverable reserves could be exhausted within the next 15 to 20 years.
|
This week's Market Insights article is a 5 minute read! |
|
|
The beginning of 2026 was all about Gold. The yellow metal jumped from $4,300/oz at the start of January to $5,400/oz by the end of it - an increase of 26% in less than a month. Many analysts thought the rally could see it hit $6,000/oz soon, especially after the Iran conflict started in February. But gold had other plans. Since the war began, it instead began its descent… down to today’s price of around $4,600/oz. So what gives? Isn’t gold meant to be the safe haven investors turn to in times of volatility? The story is more nuanced than you might first think. As you read this article, you’ll start to see why the descent actually makes sense… and why it’s unlikely to last very long. |
|
| | “The desire for gold is the most universal and deeply rooted commercial instinct of the human race.” |
|
|
Here’s a quick summary of what’s been going on: |
- Saudi Aramco's Q1 profit jumps 26% on pipeline capacity boost.
- Anthrophic signs US$1.8 billion compute deal with Akamai.
- Apple and Intel may team up again in a surprise chip deal.
- AMD rallies 19% after doubling its AI server forecast.
- Cloudflare cuts 20% of its workforce as agentic AI reshapes operations.
|
|
|
|
The market could be misreading gold's pullback... |
Gold's drop from $5,400/oz to $4,600/oz has investors questioning whether the bull case is over. But the recent sell-off has very little to do with gold's long-term fundamentals. In fact, the structural forces driving central banks and investors into gold are mounting, but they've been temporarily masked by short-term liquidity pressures from the Iran conflict. Here's what we talk about in today's article: | - Why gold is falling during a geopolitical crisis: Rather than acting as a hedging instrument (like it has in the past), gold is being liquidated as a balance sheet asset, with governments like Turkey selling more than 127 tons since February to cover rising import costs and currency pressure.
- The de-dollarization trend that's quietly reshaping demand: Central banks have added over 1,000 tons per year for three consecutive years, and 95% expect to keep buying. Deutsche Bank now forecasts gold at $8,000 by 2031, with Wells Fargo even more bullish.
- The supply ceiling lingering underneath: Nearly 75% of the world's economically recoverable gold has already been minded, with current reserves potentially running out in two decades from now.
|
We provide two Watchlists filled with gold miners with healthy balance sheets in today's article. |
|
|
|
Join the discussion by leaving a comment! |
Would you be buying, holding, or selling gold at today's prices? |
| |
|
|
Monday 🇨🇳 Industrial Production (YoY) Forecast: 5.5%, Previous: 5.7%
Why it matters: A key gauge of factory activity and global demand. Slower growth could signal weaker momentum across China’s manufacturing and export sectors. |
Tuesday 🇨🇦 Inflation Rate (YoY) Forecast: 3.0%, Previous: 2.4%
Why it matters: A rebound in inflation could reduce the chances of further rate cuts and keep borrowing costs elevated for longer. |
Thursday 🇺🇸 FOMC Minutes Why it matters: Investors will look for clues on how concerned policymakers remain about inflation and when the next rate cut could occur. |
|
|
|
Trusted by 7M+ Investors | Download the app |
This email is from Simply Wall Street Pty Ltd
Level 5, 320 Pitt St Sydney 2000, NSW, Australia. |
Simply Wall St has no position in the company(s) mentioned. Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this email/website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us. |
|
|
|
|
|
|
|
