ANZ Views Recent Gold Pullback as a Buying Opportunity

ANZ Bank interprets the recent retreat in gold prices from the $3,500/oz peak not as the start of a longer-term decline but as a temporary correction that presents a buying opportunity. Despite signs of easing geopolitical tensions, including an improvement in US-China relations, ANZ highlights a combination of macroeconomic forces that continue to support higher gold prices. Key factors cited include a contraction in Q1 US GDP—the first quarterly decline since 2022—rising inflation expectations driven in part by tariff pressures that have pushed expected inflation to 6.7%, and market pricing that anticipates up to 100 basis points of Federal Reserve rate cuts. Together, these elements create an environment in which gold’s appeal as an inflation hedge and a store of value remains elevated.

Demand statistics for Q1 reinforce ANZ’s constructive stance. Overall gold demand during the quarter reached its highest level since 2016, with investment demand surging by 170% year-over-year and exchange-traded fund (ETF) flows turning positive after prior outflows. Central bank purchases continued to be a steady source of support for the market, underscoring sovereign-level appetite for gold as part of reserve diversification strategies. At the same time, consumer demand in the form of jewelry purchases fell amid elevated price levels, demonstrating how high gold prices can temporarily weigh on some segments of demand even as investment interest rises.

ANZ retains a year-end target of $3,600/oz for gold and identifies a $3,000–$3,200/oz range as a key support zone. The bank expects that if prices revisit that support area, fresh investment flows are likely to emerge, providing a floor for the market. This outlook reflects the interplay between central bank activity, investor positioning, and macro conditions: with inflation expectations elevated and monetary policy expected to ease later in the cycle, real yields may decline, historically a bullish factor for gold.

From an investor perspective, the quarter’s data paint a nuanced picture. Strong investment demand and positive ETF flows indicate growing portfolio interest in gold as a hedge and strategic allocation. Central bank buying signals longer-term strategic positioning at the institutional level, reinforcing structural demand. Conversely, lower jewelry demand shows that consumer behavior remains price-sensitive and can pull back when markets reach elevated levels. Together, these trends suggest that while certain consumption-based sectors may cool, financial and sovereign demand can sustain price support.

Market expectations for Fed easing—reflected in forecasts of up to 100 basis points of rate cuts—are an important part of the narrative supporting gold. Lower expected policy rates reduce the opportunity cost of holding non-yielding assets like gold and can contribute to weaker real yields, which historically correlate with stronger gold performance. Alongside elevated inflation expectations, these dynamics help explain why ANZ views current weakness as corrective rather than structural.

ANZ’s projections are cautious but constructive: a target of $3,600/oz by year-end balances recognition of potential short-term volatility with the view that the macro backdrop favors higher prices over time. The $3,000–$3,200/oz support band is highlighted as a zone where buyers may re-enter the market, potentially setting the stage for renewed upward momentum. Investors considering exposure to gold should monitor inflation trends, central bank purchase activity, ETF flows, and real yield movements, as these will be key drivers of price direction going forward.