March was a very difficult month for gold. In addition, a bearish crossover occurred between the 20-day moving average and the 50-day moving average on March 25, which may indicate the continuation of a short-term downward trend for the yellow metal.
However, we have seen four consecutive sessions of gains, with gold prices reaching levels above $4,700 today. Despite the significant volatility in gold prices, they are still up about 9% since the beginning of the year, outperforming most financial assets such as global equities, with the exception of the Kospi index in South Korea. Although the Kospi fell by about 30% during March, it remained up around 20% since the beginning of the year. Gold has also outperformed bonds, the US Dollar Index, which is up about 1%, cryptocurrencies, and other precious metals such as silver (+5%).
In my view, under most upcoming economic scenarios, whether it is an economic recession, stagflation, or even persistently high inflation, gold remains one of the assets most likely to rise. This is because it is considered a safe haven that investors tend to turn to during periods of economic uncertainty and rising geopolitical risks. In addition, it serves as a hedge against inflation and currency depreciation, as well as the possibility that central banks may increase their gold purchases again.
There are three main factors that have recently pressured gold prices.
First: the strength of the US dollar and the rise in US Treasury yields amid inflation concerns.
Second: a decline in gold purchases by central banks as they seek to maintain higher levels of dollar liquidity.
Third: investors, both individuals and institutions, have been liquidating gold positions, as it is one of the assets that generated profits, in order to cover losses in other assets, particularly in the equity markets.
Goldman Sachs expects gold prices to reach $5,400 by the end of 2026, supported by continued central bank purchases. However, the bank also warned of a potential tactical downside risk that could push gold prices toward $3,800 if energy supply shocks intensify.
From a technical perspective, the Relative Strength Index (RSI) currently stands at 47 points, indicating negative momentum for gold. The MACD indicator also shows a bearish crossover between the MACD line and the signal line, supporting the view of weak momentum in the near term.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
