ING: Gold Faces Volatility, Long-Term Outlook Firm

Gold's recent upward movement is attributed to diplomatic progress concerning Iran, sustained demand from central banks, and increasing inflation expectations. However, near-term price action remains highly headline-driven and volatile due to unresolved geopolitical risks and a fragile ceasefire.

Since the conflict began, gold has fallen around 10%, as macro headwinds, specifically higher real yields and a firmer US dollar, outweighed safe-haven demand. ING maintains a constructive longer-term outlook for gold, anchored by continued official sector buying, ongoing reserve diversification, and the expectation that real rates will eventually become less restrictive.