Gold struggles amid geopolitical tensions, but Wells Fargo still sees $6,200/oz by year-end
Gold prices are failing to behave like a traditional safe-haven asset as geopolitical tensions escalate in the Middle East; however, according to one U.S. bank, the precious metal is being impacted by recent macroeconomic headwinds with no breakdown in its long-term outlook.
In its latest global investment strategy report, commodity analysts at Wells Fargo explained that gold’s counterintuitive pullback comes as investors grapple with a complex macro environment in which higher interest rates, a stronger U.S. dollar and rising real yields are outweighing geopolitical risk.
“Spikes in the U.S. dollar, Treasury yields, and expectations for rate cuts coming under pressure have all been potent headwinds for gold,” Wells Fargo said.
The comments come as gold prices see their worst losing streak since 1983. Gold prices have dropped nearly 22% since hitting record highs at $5,600 an ounce in late January. Spot gold last traded at $4,391.50 an ounce, down nearly 2.7% on the day.
Following a brief uptick at the start of the war, gold’s safe-haven bid quickly faded as investors repriced interest rate expectations and safe-haven flows supported the U.S. dollar.
Wells Fargo emphasized that rising real yields are particularly negative for gold, as they increase the opportunity cost of holding a non-yielding asset.
This dynamic has been amplified by persistent inflation concerns tied to higher energy prices. The conflict has pushed oil above $100 per barrel at times, fueling fears that central banks will keep policy tighter for longer.
Despite gold’s recent weakness, Wells Fargo said it remains firmly bullish on the yellow metal over the longer term.
The bank is forecasting prices to reach between $6,100 and $6,300 per ounce by the end of 2026, driven by continued central bank demand and an eventual moderation in yields and the U.S. dollar.
Analysts also highlighted that central bank buying remains well above long-term averages, providing a structural pillar of demand.
Looking ahead, Wells Fargo expects the war with Iran to have a limited impact on the economy, with eventual easing inflation pressures and lower Treasury yields later in the year removing key headwinds for bullion.
The bank said the U.S. is better positioned to absorb an energy shock than in past crises, citing structural changes such as a more services-driven economy, its status as a net energy exporter, and a smaller share of household spending going to energy.
It also expects the conflict to be relatively short-lived, reducing the risk of a sustained inflation increase.
Broader economic conditions also remain supportive, with Wells Fargo maintaining a constructive outlook for 2026 growth and dismissing stagflation as outside of their base-case scenario.
In this environment, rather than signaling a loss of safe-haven appeal, Wells Fargo said it sees gold’s recent underperformance as a tactical opportunity.
The bank recommends investors use the pullback to gradually build positions, suggesting that capital could rotate from energy markets into precious metals as the conflict stabilizes.
