Gold is down nearly 15% since late February, falling from highs near $5,600 to around $4,500 as Iran tensions escalated. That decline is not a contradiction of my $6,000 target — it’s being misread.
For an asset widely treated as a safe haven in periods of conflict, that kind of decline has unsettled the market and triggered questions about whether its role is changing. I take the opposite view.
Short-term price action does not invalidate the strategic case for gold. It exposes how the asset has been positioned and how quickly sentiment-driven capital can reverse when conditions shift. The underlying data, however, remains strong.
Central banks bought 863 tonnes of gold in 2025, more than double the pre-2022 average. Demand has continued into 2026. China has extended its buying streak, while Poland, Turkey, Uzbekistan and Malaysia have added to their gold reserves.
Official sector demand continues to provide a durable foundation that is largely indifferent to short-term price movements. ETF flows also surged over the past year, pushing total assets in gold-backed funds to record levels. This influx of capital reflected growing concern about inflation, currency stability and geopolitical risk.
A market receiving that level of demand was always vulnerable to a sharp correction once positioning became crowded. Gold didn’t lose its relevance, however. Too many investors approached it as a trade rather than a strategic allocation.
A significant portion of recent buying came from performance-driven capital. As prices rose, more investors entered without a clear framework for holding the asset through volatility. Once markets turned, that capital exited quickly. The speed of that reversal amplified the decline.
Real yields also moved higher, particularly in the US, increasing the relative attractiveness of government bonds. For a non-yielding asset like gold, that shift matters in the short term. Some central banks also reduced positions to support domestic currencies and secure gains after a strong rally.
These factors explain the recent weakness. They don’t alter the direction, in my opinion. My view remains that gold can reach $6,000 per ounce. The case rests on structural forces that continue to strengthen beneath the surface.
Central banks are not buying gold to capture short-term upside. They’re adjusting reserve strategies in response to a changing global financial system. The freezing of foreign reserves in recent years has reinforced the risks of holding assets tied to another country’s jurisdiction. Gold offers an alternative not subject to external policy decisions.
The shift has been gradual but persistent. Gold’s share of global reserves continues to rise as countries reduce exposure to dollar-denominated assets. This trend does not depend on market sentiment. It reflects long-term strategic priorities and contributes to a steady, price-insensitive source of demand.
Macroeconomic conditions add further support. Global debt levels remain elevated, and the cost of servicing that debt is increasing. Sustained high real yields create pressure on government finances, making them difficult to maintain over extended periods.
Inflation may fluctuate, but underlying drivers remain in place, including strong fiscal spending, supply chain fragility and energy market sensitivity linked to geopolitical developments. Investors are adjusting to that environment.
Cash gradually loses purchasing power when inflation persists. Bonds face challenges delivering real returns when yields fail to keep pace with price growth over time. Equities still offer opportunities, but performance becomes more selective as costs rise and margins tighten.
Gold occupies a different position. It is not tied to the creditworthiness of an issuer. It does not depend on income generation. Its role becomes more relevant when confidence in traditional financial structures weakens.
Recent price movements do not change those safe-haven roles. In many respects, they reinforce it by removing short-term positioning that had become stretched.
A correction driven by sentiment and flows creates a different opportunity from one driven by structural deterioration. Central bank demand remains intact. Reserve diversification continues. Inflation risks persist. Geopolitical tension remains embedded, even during periods of temporary stability.
These factors interact and reinforce each other. Gold responds to sustained imbalances across currencies, policy and global risk. My $6,000 target reflects the cumulative impact of these forces.
Strong official sector demand, continued diversification away from concentrated currency exposure, persistent inflation pressure and renewed investor positioning form a clear pathway to higher prices. Supply growth remains constrained relative to demand, adding further pressure over time.
Markets rarely move in a straight line. Corrections occur as positioning resets and expectations adjust. The broader trend, however, is shaped by deeper structural drivers.
Gold’s recent decline has created doubt. It has also created a more compelling entry point. Investors focusing on the short-term drop are reacting to the most visible part of the move, rather than the most important one.
The forces driving demand remain in place, and they continue to build. By the time the market regains confidence, gold is likely to be trading at a materially higher level.
Nigel Green is CEO and founder of the deVere Group.