Gold Prices on the Rise Amid Market Recovery

The market for precious metals was showing signs of recovery on Wednesday morning, particularly after some significant downturns. By 3:45 a.m. ET, spot gold had nearly risen by 3%, hovering around $5,079.4 per ounce. Meanwhile, New York gold futures climbed 3.3%, reaching $5,093.80. Gold, recognized as a safe-haven asset, has enjoyed a strong year, increasing by 66% over 2025 and continuing its climb into early 2026. Factors contributing to this upward trend include geopolitical tensions, erratic trade policies, and doubts regarding the Federal Reserve’s independence. However, this bullish trend faced a setback when gold prices sharply declined by almost 10% last Friday, which had a cascading effect on other precious metals like silver, palladium, and platinum.

The sell-off, sparked by the nomination of Kevin Warsh as the next Federal Reserve Chair, extended into Monday trading. Fortunately, by Tuesday, spot gold began to show signs of recovery, rising more than 6% to hold at around $4,946.81 per ounce.

Many market analysts maintain that gold still has room for growth, viewing last week’s drop as just a temporary setback rather than a complete market reversal. Russ Mold, an investment director at AJ Bell, noted that gold is currently in the midst of its third significant bull market since 1971. He mentioned that past bull markets have consistently undergone major pullbacks. For instance, during the rally from 1971 to 1980—triggered by President Nixon’s departure from the gold standard—gold skyrocketed from $35 an ounce to an astonishing $835 per ounce by 1980, despite experiencing multiple declines along the way, including a 19.4% drop at its worst.

Gold entered another bull market in 2001 after a phase of stagnation, appealing to a new wave of investors looking to navigate the aftermath of the telecom bubble and the Great Financial Crisis of 2007-2009. During the subsequent bull run from 2001 to 2011, it faced five corrections, with declines reaching as much as 16%. The ongoing bull market, which Mold points out started in 2015, had also seen five corrections before last week’s downturn.

With the significant rally of over 20% in 2022, some market participants were perhaps taken aback as the world adjusted from lockdowns. Mold indicated that past corrections had warned investors about the volatility that was always on the horizon. Thus, it’s plausible that current bearish sentiments might tempt some investors to view this downturn as an opportunity to buy more gold, especially considering ongoing geopolitical uncertainty and inflationary pressures.

George Cheverley, a portfolio manager at Ninety One, commented that the historical factors supporting gold prices remain relevant. “Looking back, gold’s present strength seems more typical of a late-cycle environment rather than an early speculative rally,” he noted. An interesting point he brought up was the unprecedented level of demand from central banks, which he believes is a strong market influencer this time around, adding a layer of structural support not present in earlier cycles.

Data from the World Gold Council indicated that central banks’ net gold purchases decreased in 2025, dropping from 345 tonnes to 328 tonnes. Nonetheless, Cheverley asserted that the underlying context should continue to propel gold prices. He stated that historically, gold has shown resilience, especially in volatile times when real yields are low and concerns around growth and debt persist.

Investment bank analysts indicated that gold, generally regarded as a safe haven, continues to be bolstered by broader economic and geopolitical uncertainties. Barclays strategists suggested that despite indicators pointing to overvaluation, gold’s premium relative to its fair value—which they estimate at around $4,000—remains robust, hinting it isn’t in a bubble.

Last Friday marked gold’s most significant one-day plunge in over a decade. Analysts from UBS expressed that investors are now contemplating whether this dip marks the end of the gold bull market or a transition into a more unpredictable phase. They emphasize that typically, gold bull markets don’t just fade away due to reduced fears or inflated prices. Rather, they tend to conclude when central banks gain credibility and shift their monetary policies.

Historically, significant changes in monetary policy, like those spearheaded by former Fed Chair Paul Volcker in 1980, reinstated confidence in the Federal Reserve and led to rising real interest rates. Analysts observed that across different price cycles, from the 1970s to the 2000s, gold prices often rise when investors doubt the Fed’s ability to maintain the dollar’s real worth.

Currently, the U.S. dollar index has decreased by over 10% in the past year due to concerns about central bank independence and an unpredictable policy environment from the current administration. UBS analysts opined that gold seems to be in the mid-to-late stages of this bull market, transitioning from a steady gain to a new peak, while experiencing intermittent pullbacks of around 5-8%. They noted that meaningful factors typically linked to the conclusion of a gold bull market— such as sustained increases in real interest rates and an overall strong dollar— are yet to become evident.

Looking ahead, UBS anticipates gold prices could reach $6,200 by next month, though they might settle back to around $5,900 by year-end.