Gold futures settled at $4,720 per ounce on Tuesday, pulling back approximately 4% from their recent record above $5,000 as diplomatic optimism about the Iran war weighed on safe-haven demand. Despite the correction, the precious metal remains up roughly 12% year-to-date, making it one of the best-performing major asset classes alongside energy.
The pullback began after President Trump signaled flexibility on ending the Iran conflict without requiring full reopening of the Strait of Hormuz. However, analysts note that the pullback has been shallow relative to the rally, suggesting that underlying structural demand remains robust.
Central Bank Demand Shows No Sign of Slowing
The World Gold Council reported that central bank purchasing continued at a record pace in the first quarter, with China extending its gold buying campaign for the seventeenth consecutive month. India, Poland, and Turkey have also been significant buyers, reflecting a broader de-dollarization trend that accelerated after the 2022 sanctions on Russian reserves.
Goldman Sachs maintained its year-end target of $6,000 per ounce, arguing that even a resolution to the Iran conflict would leave the fundamental drivers of gold demand intact: geopolitical fragmentation, persistent inflation concerns, and central bank diversification away from dollar-denominated reserves. UBS echoed the bullish outlook, forecasting $5,800 as a base case.
Mining Stocks Outperform Despite Correction
Gold mining equities have outperformed the broader market by more than 25 percentage points year-to-date. The VanEck Gold