Gold prices experienced a significant decline on Monday, dipping below the $4,000 mark as investors reassessed their positions amid improving prospects for a US-China trade agreement. The price of spot gold fell to just under $3,980 per troy ounce, while December futures plummeted by over 3%, at one point dropping below the crucial threshold of $4,000.
These shifts in gold prices coincided with positive signals from US and Chinese officials about a potential resolution to the ongoing trade standoff, particularly ahead of an anticipated meeting between President Trump and Chinese leader Xi Jinping later this week.
Last Tuesday marked a historic drop for gold, which saw its largest daily decline in over a decade. Prior to this, gold futures had remained securely above the $4,000 level and were in the midst of the most substantial year-to-date rally the market had seen in over 40 years, boasting a remarkable nine-week winning streak.
Bespoke Investment Group commented on the recent fluctuations, referencing data from the past few decades. “Since 1975, there have been 16 other similar reversals,” the firm noted. They cautioned that while some reversals have indicated both short and long-term peaks in gold prices, others have occurred within longer-term upward trends. “While gold definitely lost some of its luster last week, there’s still the potential that it only needs some polish,” they added.
Despite the recent downturn, analysts on Wall Street maintain an optimistic outlook for gold as the market heads into the following year. UBS Global Wealth Management’s chief investment officer, Ulrike Hoffmann-Burchardi, reiterated the metal’s role as an effective portfolio diversifier. “Further gains toward our upside case of USD 4,700 per ounce still possible should adverse macro and political developments emerge,” she suggested. Hoffmann-Burchardi also recommended that investors capitalize on any price declines to enhance their holdings, particularly if their allocations fall below favorable mid-single-digit levels in a diversified portfolio.
Additionally, Bank of America analysts reiterated a bullish stance, predicting that gold could peak at $6,000 per ounce by mid-2026. Goldman Sachs also revised its forecast, now anticipating that gold will reach $4,900 per troy ounce by the end of next year, up from an earlier estimate of $4,300.
As the global financial landscape evolves and political dynamics shift, gold’s historic role as a safe-haven asset continues to draw the attention of investors looking for both stability and growth in their portfolios.
