DBS and OCBC’s prediction for Gold: “Buy the dip” amid two-way risks

Gold (XAU/USD) trading is defined by a sharp divide between short-term tactical traders and long-term structural buyers. While elevated real yields and restrictive Federal Reserve policies have encouraged speculative sellers to build short positions, the metal continues to find a firm floor through consistent central bank demand and resilient ETF accumulation. This creates a market structure where near-term volatility is high, yet the underlying long-term uptrend remains supported by macroeconomic and geopolitical hedges.

DBS Group Research: A bifurcated market

Eugene Leow, analyst at DBS Group Research, provides a look into the diverging behaviors of market participants. His analysis highlights that while hedge funds have been retreating, the underlying appetite for Gold remains healthy. This divergence suggests that any shift toward a more dovish Federal Reserve could catch short-sellers off guard, potentially fueling a rapid price recovery.

"The contrast between deteriorating futures positioning and steadily rising ETF holdings reveals a bifurcated market structure at present."

OCBC: Technical resilience and central bank demand

Strategists Sim Moh Siong and Christopher Wong of OCBC emphasize the technical stability of Gold following recent market turbulence. The analysts point to the "structural drivers" – specifically central bank demand – that continue to underpin the market regardless of monthly fluctuations. 

"We remain in favour of buying on dip (instead of chasing longs) in current environment. Focus remains on how the [US-Iran] ceasefire and discussion pan out, while near-term directional trade can still take cues from broader risk sentiment."

The consensus: Where is Gold heading next?

The outlook from these analysts suggests a "cautiously constructive" path forward for Gold. Both DBS and OCBC agree that while the traditional Gold playbook has been challenged by high yields, the downside is limited by continued institutional accumulation. DBS highlights the possibility of a “strong rally” if US inflation cools, while OCBC identifies key technical support at $4,670. Ultimately, both banks advocate for patience, suggesting that the most profitable strategy currently lies in accumulating on price pullbacks rather than chasing rallies in an uncertain geopolitical climate.

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)