Gold retreated from its January high and has since moved back toward important technical levels, a pattern Yardeni Research highlighted in a note issued on Friday. The firm argued the metal is testing a cluster of supports that, collectively, should limit further downside and could present an entry for investors who can look beyond immediate geopolitical and market pressures.
The precious metal reached its peak on January 29 before slipping sharply near the end of March as fighting intensified in the Middle East. Prices recovered into mid-April during a short-lived ceasefire, but the rally faltered and the market is once again approaching a set of converging technical indicators.
Specifically, Yardeni pointed out that gold is simultaneously testing its March 26 low, the 200-day moving average and an intermediate uptrend line. The research note described that cluster as "quite a bit of support, which should hold, in our opinion," and noted that the pullback has returned gold to an upward-trending channel that has been present since late 2023.
On targets, Yardeni Research left intact its price projections of $5,500 by year-end and $10,000 by the end of the decade, stating that the rally in gold should resume once the war in the Middle East concludes. The firm emphasized that these long-term estimates align with a broader forecast that the S&P 500 will reach 10,000 by decade's end, a trajectory that Yardeni expects will prompt investors to reallocate into alternative assets, including gold, as equities advance.
At the same time, Yardeni identified several near-term headwinds that could constrain a sustained upside move. The research note listed a stronger U.S. dollar, upward pressure on interest rates and central bank gold sales as the primary obstacles. Additionally, the firm flagged the Federal Reserve as a potential risk, saying the Fed "is likely to turn more hawkish during the summer," a shift that could stall any serious rally attempt in the near term.
Investors assessing gold's current setback therefore face a mix of technical support and macroeconomic challenges. While Yardeni expressed confidence that the overlapping support levels should hold, it also acknowledged the potential for monetary policy and currency strength to delay a renewed upward phase until geopolitical tensions ease.
Analysis takeaway - Gold's near-term trajectory appears balanced between robust technical support and notable macroeconomic pressures that could impede an immediate recovery. The long-term outlook, according to Yardeni, remains bullish contingent on broader market shifts and a resolution of regional conflict.