In the first quarter of 2026, gold experienced a rollercoaster market with "initial surge, then massive volatility, followed by deep correction," revealing a rare disconnect between short-term logic and long-term structure.

1. Market Review: Three Phases

Phase One (early January to January 28): Gold prices rose steadily, approaching a record $5,600 per ounce. At the start of the year, markets widely expected the Federal Reserve to begin cutting interest rates. Coupled with U.S. military strikes against Venezuela igniting safe-haven demand, funds flooded into the market chasing higher prices.

Phase Two (January 29 to March 2): Gold prices plunged dramatically. On January 30, a single-day drop exceeded 9%, and the next day, prices briefly fell below $4,400 per ounce. Then, with the escalation of Middle East geopolitical conflicts, gold surged past $5,400 on March 2. The sharp decline at the end of January was driven by extreme overbought conditions—before the plunge, non-commercial net long positions in gold futures reached 94%, RSI broke above 90, and after CME raised margin requirements, automated stop-losses and long-liquidation triggered a cascade.

Phase Three (March 3 to end of March): Gold prices turned downward, briefly falling below $4,100, erasing most of the gains since the start of the year. Despite ongoing escalation of conflicts involving the U.S., Israel, and Iran, gold failed to act as a safe haven and instead became one of the worst-performing major assets. By late March, gold futures had declined approximately 27% from the high of around $5,667 on January 29.

2. Deep Dive into Driving Logic

⚠️ Short-term bearish factors: Why did gold fall sharply amid geopolitical crises?

First, soaring oil prices reversed expectations of rate cuts. Middle East conflicts pushed oil above $100/barrel, increasing inflation pressures. Market expectations shifted from rate cuts to a "sharp increase in the likelihood of rate hikes within the year." The March rate decision kept rates steady at 3.50%-3.75%, with the dot plot indicating only one rate cut for the year, and several officials leaning toward no cuts. In a high-interest-rate environment, holding non-yielding gold incurs significant opportunity costs.

Second, extremely crowded speculative positions were forced to close. Non-commercial net long positions in gold futures shrank by over 80% in a short period, as speculative traders panicked and exited. This chain reaction of long liquidation, combined with a threefold increase in ETF trading volume compared to 2025 averages—creating a "crowded trade"—became a key factor crushing the market.

Third, some central banks sold gold to obtain dollar liquidity. The Turkish central bank's gold reserves plummeted by over 118 tons (about $20B) in two weeks, as reliance on energy imports and soaring oil prices compelled it to sell gold to buy dollars for energy needs.

📈 Long-term support: Three major structural factors remain intact

Despite short-term pressures, the core logic supporting long-term strength in gold has not reversed:

1. Central banks worldwide continue to buy gold, maintaining strong structural demand. In 2025, global central banks net purchased 863 tons of gold, with emerging market central banks like Poland and China increasing holdings. Under the "de-dollarization" trend, this continues unabated.

2. The credibility of the US dollar is waning, and the "de-dollarization" narrative persists. US government debt approaches $39 trillion, and the dollar's share in global foreign exchange reserves continues to decline. Gold is viewed as an "unliability anchor" to restore global balance sheets. This structural logic will not change due to short-term fluctuations.

3. The long-term technical bull market in gold remains unbroken. Gold has achieved its 10th consecutive quarter of record highs, and the long-term bull market initiated in 1999 remains intact.

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3. Mainstream Institutional Views

Institution | View
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Goldman Sachs | Maintains a bullish outlook, with a baseline forecast of $5,400/oz by end-2026; if Middle East conflicts escalate and Western finances are impacted, gold could surge to $6,100
UBS | Views recent correction as a buying opportunity, expecting an average price of $5,000/oz in 2026, with potential for new all-time highs within the year
Royal Bank of Canada Wealth Management | Believes gold in the $4,200–$4,400 range offers high safety margins; around $4,900 may face resistance; expects more range-bound trading this year
Some analysts (Qisheng Futures, etc.) | Expect gold prices to stabilize and recover within a range in Q2, with "oil prices not falling, gold prices difficult to rise"

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4. Current Price Analysis and Risk Warning

As of April 3, gold futures traded around $4,690 per ounce, down about 17% from the recent high and up roughly 14% from the low.

The market is in a typical "re-pricing of logic" phase: short-term suppression driven by oil prices, interest rates, and the dollar, but the long-term fundamentals of central bank gold purchases and de-dollarization remain solid. There are two highly uncertain paths ahead—if recession signals cause rate cut expectations to re-emerge, gold could quickly recover; if Middle East tensions worsen and trigger a liquidity crisis, a double bottom cannot be ruled out.

For ordinary investors, the risk of chasing gains and selling in panic is high in the short term. It may be safer to focus on the $4,200–$4,400 support zone and adopt a long-term allocation perspective rather than short-term trading.