Gold price poised for trend reversal

The price of gold has experienced a notable decline over the past few months, yet experts are pointing to factors that could signal an upcoming trend reversal.

Investors who have participated in the gold market have seen substantial gains over the last five years, with prices rising more than 150 percent in dollar terms. However, this period was marked by significant volatility. The precious metal reached a record high of $5,513 at the end of January 2026, followed by a sharp correction. This downturn was partly attributed to then-U.S. President Donald Trump's announcement of Kevin Warsh as his choice for the new Federal Reserve chairman. This news brought calm to market participants who had been concerned about the stability of U.S. monetary policy, especially after Trump had openly criticized and pressured the previous chair, Jerome Powell, over his interest rate decisions.

With market participants anticipating that the new Fed chair, Warsh, would counteract inflation with interest rate hikes, fixed-income securities became more attractive compared to gold investments. This environment led to further sell-offs, particularly of gold ETFs by speculators. The escalating conflict between the U.S. and Iran, including a threatened military strike in January that was later carried out in February with Israel, also contributed to market uncertainty and a rise in oil prices, fueling fears of a new inflationary wave.

Despite speculative selling, many central banks, particularly in emerging markets, have largely maintained their gold reserves accumulated in previous years. This strategy aims to diversify their foreign exchange reserves for the long term. Ronald-Peter Stöferle, a partner at Liechtenstein-based asset manager Incrementum, noted that after acquiring 863 tons in 2025, gold represented 27 percent of global currency reserves by year-end, surpassing both the Euro and the Dollar. The trend of increasing institutional investment continues, with India's regulatory authority allowing its state pension system to allocate up to one percent to gold ETFs since late 2025. Similarly, major Chinese insurers have been permitted to invest in physical gold on a similar scale since late 2025.

Adding to the bullish sentiment, oil prices are showing signs of an increase, with Brent crude recently trading at a certain level. The potential hesitation by central banks to raise interest rates further could provide a supportive environment for gold prices, making it a more appealing investment.

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After a renewed purchase volume of 863 tons in 2025, gold at the end of the year with 27 percent of global currency reserves for the first time overshadowed both the Euro and the Dollar.