Gold prices crack below $5,000; can slide another 9%: YES Securities

The West Asia conflict has changed the bullish narrative around Gold. High oil prices, US recession-cum-inflationary fears, and fading Fed rate cut bets weigh on the sentiment, says YES Securities.

Gold prices cracked over 3 per cent in Wednesday's trade, and quoting at the lowest point ($4,850) since February 6, 2026 amid mixed signals for the safe-haven precious metal.  Analysts argue that while geopolitical tensions position Gold as a safe-haven investment, fears of possible rate hikes due to inflationary pressure and high yields weigh on the sentiment.  The US Federal Reserve on Wednesday kept key rates unchanged, and indicated that only one rate cut was likely in 2026.  "A hawkish pause by the Federal Reserve, along with elevated Treasury yields, weighed on Gold's safe-haven appeal despite escalating tensions in West Asia.  While ongoing geopolitical tensions offered some support at lower levels, a stronger US dollar capped any meaningful upside in the yellow metal," said Deveya Gaglani, Senior Research Analyst - Commodities at Axis Securities.  The analyst also highlighted that at yesterday's close, Gold prices dipped below the 60-day Exponential Moving Average (EMA) for the first time since July 25, signalling underlying weakness.  At current levels, Gold prices are down over 11 per cent from its all-time high around $5,449.50 registered in late January 2026. 

Gold: Bear claws v/s Bull horns

  YES Securities in its note of Gold states that the earlier rally in Gold prices was supported by a "sell-America" consensus over concerns of Fed independence, appointment of a new Fed chair and a weakening US economy.  Gold prices rallied to record highs as US uncertainty hit all-time high in 2025 over tariff concerns, government shutdown and concerns around its fiscal policy and Fed's independence.  The situation has now changed dramatically after the onset of the West Asia conflict, which raised oil prices significantly. While the chatter now is that the US might not avoid recession, inflation is expected to stay elevated, thus fading Fed rate cut bets.  A rise in inflation and a pause from the Fed also reinforce expectations of higher UST yields, likely limiting upward momentum in gold, highlights the brokerage note.  While structurally, Gold's position as a safe-haven remains, oil has also emerged as an asset class in the wake of the crisis. If the war continues in the medium term, the positioning in Gold will be a delicate balance between real yields, dollar's direction,  and on the other side, the need for a defensive investments, said YES Securities.  READ | Gold, silver ETFs fall up to 6% on Fed meet outcome, West Asia tensions 

Will Central Banks continue to buy Gold in 2026?

  As per WGC report, central banks on a net basis bought 5 tonnes in January compared to an average of 27 tonnes per month in 2025. While central banks' demand may sustain in 2026, the pace may be slower than 2025. 

 

 

 

Technical outlook on Gold

  Historically, Gold prices have performed well in periods of stagflation, and such risks are building now. However, for the immediate run, our technical analysis points to a bearish bias in gold prices, says YES Securities. 

Gold price chart (Source: YES Securities)

  The brokerage firm reckons that a close below $5,000/oz on a daily basis will confirm the breakout for a move to $4,600 - $4,400/oz, while this will be invalidated in case of a close above $5,150/oz.  Disclaimer: Views and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers' discretion is advised.