Gold prices moved lower on Thursday as a stronger US dollar and rising inflation concerns reduced expectations of near-term interest rate cuts, placing short-term pressure on the precious metal despite ongoing geopolitical tensions in the Middle East.
Spot gold briefly fell as much as 1.5% to around US$5,053 per ounce, erasing most of the week’s gains. US gold futures also slipped roughly 1% to near US$5,080 per ounce in New York trading.
The pullback comes after several weeks of strong gains driven by rising geopolitical risk. Gold advanced approximately 3% during February, recovering steadily from a sharp end-of-January correction when prices temporarily dropped as much as 12%.
Inflation Concerns Resurface
The latest decline coincides with growing inflation fears linked to the ongoing conflict involving Iran. Disruptions to global energy supply have pushed oil and gas prices higher, raising concerns that inflation could accelerate again.
Higher inflation could delay interest-rate cuts from the US Federal Reserve — a factor that typically pressures gold in the short term because bullion does not generate yield.
Financial markets have already adjusted their expectations. Traders are now pricing in around 35 basis points of US rate cuts by year-end, down from about 60 basis points expected just a week ago.
Liquidity Pressures Also Weigh on Gold
Another factor behind the recent weakness is investor behaviour during periods of market stress.
When equity markets experience volatility, some investors sell gold temporarily to raise cash and cover losses elsewhere in their portfolios.
Ewa Manthey, commodity strategist at ING Bank, noted that some of the recent selling appears linked to equity market movements rather than a shift in gold’s long-term fundamentals.
According to Manthey, investors have been using gold as a source of liquidity, particularly during US trading sessions when equity volatility has been elevated.
Historically, this type of selling pressure tends to ease once broader market volatility stabilises.
Gold Remains Strong in 2026
Despite the recent pullback, gold remains one of the strongest performing assets this year.
The metal is still up roughly 18% year-to-date, supported by persistent geopolitical tensions, trade uncertainty and concerns about long-term currency stability.
Gold surged to around US$5,260 per ounce earlier in the week before investors moved quickly to raise cash, triggering a temporary correction.
At the time of writing, gold is trading near US$5,165 per ounce, highlighting the significant price swings currently affecting the market.
Major Banks Remain Bullish
Despite short-term volatility, major financial institutions continue to hold bullish long-term views on gold.
Current price forecasts from major banks include:
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Morgan Stanley: US$5,700 per ounce (bull case, second half of 2026)
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Goldman Sachs: US$5,400 per ounce by December 2026
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J.P. Morgan: US$6,300 per ounce by the end of 2026
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UBS: US$6,200 per ounce during 2026
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Deutsche Bank: US$6,000 per ounce target
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Citi Research: US$5,000 short-term outlook
Analysts say that interest-rate expectations, currency markets, geopolitical tensions and liquidity conditions will continue to influence gold prices in the near term.
At the same time, many long-term investors remain focused on the structural shift underway in the global monetary system, where central banks are increasingly diversifying reserves away from traditional fiat currencies.
Why Cost Averaging Into Physical Bullion Matters
In volatile markets like the one currently unfolding, attempting to perfectly time gold price movements can be extremely difficult.
That is why many experienced bullion investors adopt cost averaging into physical gold and silver.
Cost averaging involves buying bullion consistently over time, regardless of short-term market swings. This disciplined approach allows investors to smooth out volatility while steadily building their holdings.
Key advantages of cost averaging include:
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Reducing the risk of buying at market peaks
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Taking advantage of price dips during volatility
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Building long-term physical bullion positions gradually
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Removing emotional decision-making from investing
When gold can move hundreds of dollars per ounce within a single week, a cost-averaging strategy becomes one of the most effective ways to accumulate precious metals.
Physical Bullion Remains the Long-Term Strategy
While short-term liquidity pressures and currency movements can influence daily price fluctuations, the long-term fundamentals supporting gold remain intact.
Rising global debt levels, geopolitical instability, currency volatility and continued central bank buying are all contributing to the ongoing structural bull market in precious metals.
For investors seeking long-term wealth protection, owning physical bullion — accumulated through a disciplined cost-averaging strategy — remains one of the most reliable approaches in uncertain financial markets.
At FirstGold, investors can securely acquire physical gold and silver bullion, allowing them to build real, tangible wealth while navigating the volatility of global markets.
