Gold drops to $4,900 — but one analyst says the precious metal trade ‘remains intact’

Gold (GC=F) retreated more than 2% on Tuesday, but the recent volatility may be temporary as Wall Street analysts see a bullish outlook for the precious metal in 2026.

Gold futures hovered around $4,900 as Asian markets closed for the Chinese New Year. Meanwhile, Iran and the US reached a “general agreement” on a possible nuclear deal, easing tensions in the Middle East.

“Despite short-term softness, the structural drivers supporting gold remain firmly in place,” Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a newsletter.

The strategist highlighted central bank buying, geopolitical fragmentation, and portfolio diversification as key factors driving gold’s safe-haven appeal amid concerns over currency debasement.

“Together, these forces suggest that, although corrections are inevitable after parabolic advances, the broader bull trend remains intact,” wrote Hansen.

Goldman Sachs analysts reiterated a significant upside risk to their forecast for gold of $5,400 per troy ounce by the end of 2026.

“We see upside risk to our $5,400 Dec26 forecast from private sector diversification,” analyst Lina Thomas and her team said in a note earlier this month.

“We estimate that every 1bp increase in the gold share of US financial portfolios — driven by incremental purchases — raises prices by 1.5%,” she added.

Investors also expect the Federal Reserve to cut interest rates this year, with Polymarket odds favoring two to three decreases.

Lower interest rates could put downward pressure on the greenback, which in turn would send the price of commodities invoiced in dollars higher.

UBS analysts said in a note earlier this month that “lower US real interest rates, persistent geopolitical worries, and policy uncertainty should continue to drive demand for gold.”

And in a Bank of America fund manager survey released Tuesday, 50% of respondents said “long gold” was the most crowded trade in February for the second month in a row.

The precious metal has been volatile since its rally came to a halt in late January, with futures dropping sharply from a high of $5,600. Recent market sell-offs in the commodity complex also sent silver tumbling from its all-time highs in January.

Silver (SI=F) is down 4% year to date, while gold has gained 12%.