The U.S.-Iran war "shattered" the gold bull market? Credit Suisse: prices will continue to rise in the short term and will fall in the next few years!

UBS precious metals strategist Joni Teves recently warned that the prolonged US-Iran conflict and sustained high oil prices could mean that the upward trend in gold prices is coming to an end. In a recent interview, she explained that the market currently expects the Federal Reserve to maintain interest rates this year, which means the likelihood of gold prices rising is small. "Investors may be witnessing the end of the gold bull market," she said. "We believe that the gold cycle should roughly synchronize with the Federal Reserve cycle, so we expect gold prices to gradually fall by the end of this year and decline over the next few years," she added. According to Teves, during periods of market volatility, as traders flock to safe-haven assets, gold prices tend to rise during conflicts. However, gold prices usually have an inverse relationship with Federal Reserve interest rates, meaning that when the central bank decides to cut rates, gold prices rise. The day before the US and Israel launched attacks on Iran, CME's Federal Reserve watch tool showed that the probability of the bank keeping rates unchanged until the December policy meeting was only 4%. However, with the outbreak of the US-Iran war, everything changed: oil prices surged, sparking inflation concerns, and the market no longer expected rate cuts, even beginning to worry about rate hikes. However, Federal Reserve Chairman Powell's latest statements finally eased market tension. Powell said on Monday that given the energy impact of the US-Iran war, the Federal Reserve is inclined to keep rates unchanged and temporarily "ignore" the impact. Overall, the market still expects the Federal Reserve to "stand pat" this year, meaning that the likelihood of gold prices rising is small. Teves said this is why UBS now expects "the trend of gold rising to gradually weaken by the end of the year and decline over the next few years." As of the time of writing, the price of gold is hovering around $4600 per ounce, far below the peak of nearly $5600 at the end of January. Over the past month, gold prices have fallen by about 15%, a 20% drop from the all-time high set over two months ago. Short-term gains Currently, UBS's year-end target price for gold is still $5600 per ounce, mainly based on investors continuing to achieve portfolio diversification through the purchase of precious metals. Teves said this trend may continue to push gold prices higher. "We believe that overall, the market's investment in gold is still insufficient. We believe that the uncertainty facing the market further strengthens the trend of investors wanting to hold more diversified portfolios, with gold seen as a key component of the portfolio," she added. Teves further pointed out that UBS's basic expectation is that after a period of consolidation, with increased gold allocation, prices will hit new highs later this year. "However, given the ongoing conflict in the Middle East, macroeconomic prospects and policy expectations may undergo significant changes, which in turn will affect the medium- to long-term trajectory of gold." She also added that the recent decline in gold prices may provide investors with buying opportunities at low levels. "We believe that at the current price levels, any further pullbacks should be attractive to many investors. Nevertheless, many market participants are still waiting and watching for the war situation to become clearer," she said. This article is selected from "Caixin News," GMTEight Editor: Li Fo.